Multiple Choice
Learn and Earn Company is financed entirely by common stock that is priced to offer a
20% expected rate of return. The stock price is $60 and the earnings per share are $12. If the company repurchases 50% of the stock and substitutes an equal value of debt yielding 8%, what is the expected earnings per share value after refinancing?
A) $12.00
B) $19.20
C) $24.00
D) None of the above
Correct Answer:
Verified
Correct Answer:
Verified
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