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NoNuns Companies has a 2 1 percent tax rate and has $ 3 5 0 million in assets, currently financed entirely with equity. Equity is
NoNuns Companies has a percent tax rate and has $ million in assets, currently financed entirely with equity. Equity is worth $ per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below:
tableStateRecession,Average,BoomProbability of state,Expected EBIT in state,$ million,$ million,$ million
The firm is considering switching to a percentdebt capital structure and has determined that it would have to pay an percent yield on perpetual debt in either event. What will be the standard deviation in EPS if NoNuns switches to the proposed capital structure and can take full advantage of the debt interest tax hields
Note: Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.
Standard deviation in EPS
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