You are the CFO of a publicly traded firm. The CEO would like to boost the next quarter's EPS (earnings per share) by borrowing some money to buy some of the outstanding shares. According to him, this operation would necessarily increase the next quarter's EPS, as the denominator in its calculation would be a smaller number. Which of the following statements is true?

Group of answer choices

The CEO is correct: independently of the next quarter's EBIT, this restructuring operation would increase the EPS as it would reduce its denominator

The CEO is wrong: independently of the next quarter's EBIT, this restructuring operation would reduce the EPS because the additional interest would reduce its numerator

The CEO is wrong: if the next quarter's EBIT is too low, EPS could be smaller under the new capital structure because the interest would be a large fraction of the EBIT

The CEO is wrong: if the next quarter's EBIT is too large, EPS could be smaller under the new capital structure because the interest would be a large fraction of the EBIT