Multiple Choice
Cross Town Cookies is an all-equity firm with a total market value of $720,000.The firm has 150,000 shares of stock outstanding.Management is considering issuing $200,000 of debt at an interest rate of 7 percent and using the proceeds to repurchase shares.The projected earnings before interest and taxes are $58,600.What are the anticipated earnings per share if the debt is issued? Ignore taxes.
A) $0.25
B) $0.33
C) $0.38
D) $0.41
E) $0.47
Correct Answer:
Verified
Correct Answer:
Verified
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