Multiple Choice O O O O $1.86 O $2.11 0 0 $1.83 $2.29 Cross Town Cookies is an all-equity firm with a total market value of $800,000. The firm has 46,000 shares of stock outstanding. Management is considering. Issuing $209,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $73.400. What is the EPS if the debt is issued? Ignore taxes. $1.37 Multiple Choice $161 $.99 $1.86 $1.36 $174
Multiple Choice O O O O $1.86 O $2.11 0 0 $1.83 $2.29 Cross Town Cookies is an all-equity firm with a total market value of $800,000. The firm has 46,000 shares of stock outstanding. Management is considering. Issuing $209,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $73.400. What is the EPS if the debt is issued? Ignore taxes. $1.37 Multiple Choice $161 $.99 $1.86 $1.36 $174
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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Question
130.
Transcribed Image Text:Ornaments, Incorporated, is an all-equity firm with a total market value of $696,000 and 36,100 shares of stock outstanding. Management believes the earnings
before interest and taxes (EBIT) will be $100,200 if the economy is normal. If there is a recession, EBIT will be 15 percent lower, and if there is a boom, EBIT will be
25 percent higher. The tax rate is 21 percent. What is the EPS in a recession?
Multiple Choice
O
O
O
O
$1.86
O
$2.11
OC
$1.83
Cross Town Cookies is an all-equity firm with a total market value of $800,000. The firm has 46,000 shares of stock outstanding, Management is considering
Issuing $209,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $73,400. What is the EPS
If the debt is issued? Ignore taxes.
$2.29
Multiple Choice
$1.37
$1.61
$.99
$1.86
$1.36
$174
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