EPS and Debt-to-Equity Your corporation is currently all-equity financed with 400,000 shares of common stock selling for $32 a share. Currently your firm generates $4,000,000 in EBIT annually and has a 29% dividend payout ratio. Your firms tax rate is 21%.

A) What is your firms current earnings per share and dividend per share?

B) Your firm is considering financing an expansion with an $8,000,000 bond issue that will pay 6.2% annually in interest. If the expansion increases your firms EBIT to $6,500,000, but it does not increase the stock price, what will be your firms new debt-to-equity ratio, EPS, and dividend per share?

C) If the expansion is instead financed with an issue of new stock, what will be your firms new EPS and dividend per share?