EPS and Debt-to-Equity Premier Stonework's shareholders believe that paying off the company's debt of $13,000,000 with a new stock issue will improve their EPS. Premier's EPS is currently $7.47. There are 1,100,000 shares outstanding that sell for $20 each. Premier's tax rate is 21% and the interest rate on its debt is 8%. What would the EPS be if Premier issued new shares and used the proceeds to retire its debt? Are the shareholders correct in thinking that EPS would go up? Premier's current earnings before interest and taxes (EBIT) is $ to the nearest dollar.) (Round
EPS and Debt-to-Equity Premier Stonework's shareholders believe that paying off the company's debt of $13,000,000 with a new stock issue will improve their EPS. Premier's EPS is currently $7.47. There are 1,100,000 shares outstanding that sell for $20 each. Premier's tax rate is 21% and the interest rate on its debt is 8%. What would the EPS be if Premier issued new shares and used the proceeds to retire its debt? Are the shareholders correct in thinking that EPS would go up? Premier's current earnings before interest and taxes (EBIT) is $ to the nearest dollar.) (Round
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:EPS and Debt-to-Equity Premier Stonework's shareholders believe that
paying off the company's debt of $13,000,000 with a new stock issue will
improve their EPS. Premier's EPS is currently $7.47. There are 1,100,000
shares outstanding that sell for $20 each. Premier's tax rate is 21% and the
interest rate on its debt is 8%. What would the EPS be if Premier issued new
shares and used the proceeds to retire its debt? Are the shareholders correct
in thinking that EPS would go up?
Premier's current earnings before interest and taxes (EBIT) is $
to the nearest dollar.)
(Round
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