Tesaro would like to change its capital structure such that its capital is 80% equity financed and 20% debt financed by issuing debt and using it to buy back equity. The appropriate cost of debt would be 10%. If you have not completed question 4A, please assume an arbitrary number for Tesaros value to proceed and state your assumption clearly.

Earnings per share (i) Calculate Tesaros earnings per share prior to the restructuring. (ii) Calculate Tesaros earnings per share after the restructuring. (iii) Based on your earnings per share calculations, is the restructuring a good idea? Why or why not?