Multiple Choice
Brown's is an unlevered firm with a total market value of $368,000 and 18,400 shares of stock outstanding.The firm has expected EBIT of $17,500 if the economy is normal and $19,000 if the economy booms.The firm is considering a bond issue of $120,000 with an attached interest rate of 5.9 percent.The bond proceeds will be used to repurchase shares.The tax rate is 34 percent.What will be the earnings per share after the repurchase if the economy booms?
A) $0.92
B) $0.84
C) $0.75
D) $0.59
E) $0.63
Correct Answer:
Verified
Correct Answer:
Verified
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