Cross Town Cookies Is an All-Equity Firm with a Total

Multiple Choice

Cross Town Cookies is an all-equity firm with a total market value of $4,187,100.The firm has 127,500 shares of stock outstanding.Management is considering issuing $300,000 of debt at an interest rate of 6 percent and using the proceeds to repurchase shares.The projected earnings before interest and taxes are $215,600.What are the anticipated earnings per share if the debt is issued? Ignore taxes.(Round the number of shares repurchased down to the nearest whole share.)

A) $1.59
B) $1.76
C) $1.38
D) $1.67
E) $1.47