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Zebedee Inc. is an unlevered firm that doesn't pay taxes. Zebedee has 10,000 common shares outstanding at a price of $20 per share and an

Zebedee Inc. is an unlevered firm that doesn't pay taxes. Zebedee has 10,000 common shares outstanding at a price of $20 per share and an EPS of $3.00. It plans to issue $50,000 of debt and will use the proceeds to buy back shares. The cost of debt is 6%. What will the new EPS be after the debt issue? $4.00 $2.70 $3.60 $3.45

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