Multiple Choice
Durbin,Inc.,is an unlevered firm with a total market value of $460,000 and 40,000 shares of stock outstanding.The firm has expected EBIT of $48,000 if the economy is normal and $56,000 if the economy booms.The firm is considering a bond issue of $57,500 with an attached interest rate of 6.8 percent.The bond proceeds will be used to repurchase shares.Ignore taxes.What will be the earnings per share after the repurchase if the economy booms?
A) $1.49
B) $1.63
C) $1.45
D) $1.54
E) $1.68
Correct Answer:
Verified
Correct Answer:
Verified
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