Assume an Unlevered Firm Has Total Assets of $6,000,earnings Before

Multiple Choice

Assume an unlevered firm has total assets of $6,000,earnings before interest and taxes of $600,and 500 shares of stock outstanding.Further assume the firm decides to change 40 percent of its capital structure to debt with an interest rate of 8 percent.Ignore taxes.What will be the amount of the change in the earnings per share as a result of this change in the capital structure?

A) $.16
B) $.09
C) No change
D) −$.09
E) −$.16