Shark Tank Stars Corp. has no debt but can borrow at 8.25 percent. The firm's WACC is currently 15 percent, and there is no corporate tax If the firm converts to 20 percent debt, what will be Shark Tank Stars' cost of equity? R_E = 15% R_E = 16.69 % R_E = 16 % R_E =17.34% All-Equity-Financing. Inc. has no debt outstanding and a total market value of $106.000. Earnings before interest and taxes. EBIT, are projected to be $9, 700 if economic conditions are normal. All-Equity-Financing is considering a $30, 600 debt issue with a 7 percent interest rate. The proceeds will be used to repurchase shares of stock. There are currently 5, 300 shares outstanding. Assume that All-Equity-Financing has a tax rate of 30 percent. Calculate earnings per share, EPS, for All-Equity-Financing before recapitalization. EPS - .98 EPS = 1.28 EPS = 1.40 EPS = 1.44 Using the same information in Question 27, calculate earnings per share, EPS. for All-Equity-Financing under NORMAL economic conditions after the recapitalization (that is, with debt used to finance the firm) EPS = 98 EPS = 1.282 EPS = 1.40 EPS-1.44 Abbott Labs Co. has a 40 percent tax rate. Its total interest payment for the year just ended was $36 million. What is the interest tax shield? $13, 040,000 $15, 120,000 $14, 030,000 $14, 400,000 If a firm starts to pay large dividends, then: It will increase its debt leverage. It will increase its D/E ratio. It will tend to have larger EPS in normal and great economic times. All of the above