Multiple Choice
Wealth and Health Company is financed entirely by common stock that is priced to offer a 15 percent expected return.The common stock price is $40/share.The earnings per share (EPS) is expected to be $6.If the company repurchases 25 percent of the common stock and substitutes an equal value of debt yielding 6 percent, what is the expected value of earnings per share after refinancing? (Ignore taxes.)
A) $6
B) $7.52
C) $7.20
D) $6.90
Correct Answer:
Verified
Correct Answer:
Verified
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