A Company's Capital Structure Consists of Common Stock Only, Which

Multiple Choice

A company's capital structure consists of common stock only, which amounts to $14 million. However, this year, the company plans to issue $7 million of debt, and use the proceeds to repurchase $7 million of its existing equity. The stock repurchase should not change the size of the company. As a result, any change in the firm's earnings per share (EPS) must be a result of the change in its:

A) level of operations.
B) beta coefficient.
C) EPS coefficient of variation.
D) capital structure.
E) EPS standard deviation.