QUESTION 19 Assume a firm generates $400,000 EBIT annually, pays 40% tax rate, and has 80,000 shares outstanding. Calculate EPS if the firm decided to borrow $250,000 at 9% Interest and repurchases stock with the proceeds. The current stock price is $25/share. $3.50 $3.24 $5.00 $3.00 QUESTION 20 Assume the tax rate is 40%, risk-free rate and market risk premium are both 5%, the unlevered beta of the firm is 1, and the invested capital is $2,000,000 (200,000 of which is debt). What is the cost of equity? 12.2% 9.5% 10.3% 11.3%