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Use the following information to answer the questions. Assets Debt Equity Shares outstanding Current (Unlevered) $1 million $0 $1 million 10,000 (a) The above all-equity

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Use the following information to answer the questions. Assets Debt Equity Shares outstanding Current (Unlevered) $1 million $0 $1 million 10,000 (a) The above all-equity firm expects next quarter's EBIT to be $150,000. Assuming no taxes, calculate its expected EPS. (b) The above all-equity firm is considering issuing $250,000 in debt at 5% interest to repurchase stock. Assuming next-quarter's EBIT is expected to be $150,000 and assuming no taxes, calculate its expected EPS. (c) Assume the firm goes through with the restructuring, issuing $250,000 in debt at 5% interest to repurchase stock. Again, assume next-quarter's EBIT is expected to be $150,000, but now assume a 20% corporate tax rate and tax-deductible interest payments. With debt and taxes, calculate its expected EPS and expected ROE

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