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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
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
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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
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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