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how do i calculate this? Boston Lumber is unlevered with 205 shares outstanding and earnings before interest and taxes, or EBIT, of 750. Corporate earnings
how do i calculate this?
Boston Lumber is unlevered with 205 shares outstanding and earnings before interest and taxes, or EBIT, of 750. Corporate earnings are taxed at a rate of 27%. Suppose that Boston Lumber makes a decision to partition its assets into debt and equity by using the newly raised debt capital to buy back a portion of the stock. The firm issues $1950 of debt at a cost of 7.85%. The partition does not change EBIT but reduces the number of shares outstanding to 130. Which of the following is Boston Lumber's EPS after the partition? $2.12 $2.66 $3.34 $5.77 Step by Step Solution
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