River Cruises is an entirely equity financed company. The current position of the company is as follows: Number of shares 124000 Price per share $ 14 Operating income $ 152,000 Earning per share $ 1.23 The CFO of the company is proposing to issue new debt and repurchase the share using the cash from issuing the debt as follows: Amount of debt issue $ 868,000 Interest rate of debt 7%