Question
Oxford Publishing initially has no debt outstanding and a total market value of $3,085,000. Earnings before interest and taxes (EBIT) are $658,000. There are currently
Oxford Publishing initially has no debt outstanding and a total market value of $3,085,000. Earnings before interest and taxes (EBIT) are $658,000. There are currently 219,000 shares outstanding.
Oxford is considering issuing $317,000 of debt with a 4% coupon rate(i.e.,pre-tax cost of debt)and using the proceeds tobuy back shares of stock.
What is earnings per share (EPS) after the share buyback?Ignore taxes for this problem (i.e. tax rate = 0%).
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Healthcare Finance: An Introduction To Accounting And Financial Management
Authors: Louis Gapenski
6th Edition
1567937411, 978-1567937411
