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Tebow, Inc. is an all-equity firm with a total market value of $630,000 and 29,500 shares of stock outstanding. If the economy is normal, earnings
Tebow, Inc. is an all-equity firm with a total market value of $630,000 and 29,500 shares of stock outstanding. If the economy is normal, earnings before interest and taxes (EBIT) will be $90,000. If there is a recession, EBIT will be 10 percent lower, and if there is a boom, EBIT will be 10 percent higher. The firm must pay tax at a rate of 34 percent. What is the EPS in a boom? $1.81 $2.42 $3.66 $2.21 $1.61
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