Question 5 and 6 are based on the following information. Nielson Motors is currently an all equity financed firm. It expects to generate EBIT of $14 million over the next year. Currently Nielson has 8 million shares outstanding and its stock is trading at $20.00 per share. Nielson is considering changing its capital structure by borrowing $40 million permanently at an interest rate of 5% and using the proceeds to repurchase shares. Assume a corporate tax rate of 20% and no any other market frictions. 5. Nielson's EPS if they change their capital structure is closest to: A) $1.58 B) $2.00 c) $2.30 D) $2.79 6. Nielson's stock price will A) Decrease B) Increase C) Not change D) Not enough information to decide