Multiple Choice
The Quilt Shoppe is an all equity firm that has 2,500 shares of stock outstanding at a market price of $20 a share. Company management has decided to issue $10,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 8.5%. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.
A) $1.63
B) $1.70
C) $1.82
D) $1.88
E) $1.94
Correct Answer:
Verified
Correct Answer:
Verified
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