shares outstanding, with a price of $$90$ per share. Assume perfect capital markets.

a$.$ If you raise the $$180$ million by selling new shares, what will the forecast for next year's earnings per share be

b$.$ If you raise the $$180$ million by issuing new debt with an interest rate of $5\%,$ what will the forecast for next year's earnings per share be$?$

a$.$ If you raise the $$180$ million by selling new shares, what will the forecast for next year's earnings per share be

If you raise the $$180$ million by selling new shares, next year's EPS will be $ per share. $($Round to the nearest cent.$)$

b$.$ If you raise the $$180$ million by issuing new debt with an interest rate of $5\%,$ what will the forecast for next year's earnings per share

If you raise the $$180$ million by issuing new debt with an interest rate of $5\%,$ the new EPS will be $$,($Round to the nearest cent.$)$

What is the firm's forward P$/$E ratio if it issues equity? What is the firm's forward P$/$E ratio if it issues debt?

Ratio

Forward P$/$E ratio for equity

$($Round to the nearest integer.$)$

Forward P$/$E ratio for debt

$($Round to the nearest integer.$)$

How can you explain the difference? $($Select the best choice below.$)$

A$.$ The higher P$/$E ratio is justified because with leverage, EPS will grow at a faster rate.

B$.$ The lower P$/$E ratio is justified because with leverage, the EPS will decrease at a faster rate.

C$.$ The higher P$/$E ratio is justified because with leverage, the EPS will decrease at a faster rate

D$.$ The lower P$/$E ratio is justified because with leverage, EPS will grow at a faster rate.