Question
EBITDA = $16,600,000 EBIT 12,300,000 The firm finances its assets with $53,600,000 debt (costing 7.8%) and $11,800,000 shares of stock selling at $8.00 per share.
EBITDA = $16,600,000
EBIT 12,300,000
The firm finances its assets with $53,600,000 debt (costing 7.8%) and $11,800,000 shares of stock selling at $8.00 per share. The firm is considering increasing its debt by $26,800,000, using the proceeds to buy back shares of stock. The firms tax rate is 21%. The change in capital structure will have no effect on the firms operations. Therefore EIBT will remain $12,300,000.
Calculate the EPS before and after the change in capital structure and indicate changes in EPS. (round answer 3 decimal places)
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Auditing And Assurance Services
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Strawser
2nd Edition
0073128244, 9780073128245
