FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cross Town Cookies is an all-equity firm with a total market value of $780,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $197,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $71,000. What is the EPS if the debt is issued? Ignore taxes.

 

rev: 06_14_2019_QC_CS-170956

 

Multiple Choice
  •  

    $.98

  •  

    $1.32

  •  

    $1.55

  •  

    $1.68

  •  

    $1.79

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