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You Work for the CEO of a New Company That

Question 12

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You work for the CEO of a new company that plans to manufacture and sell a new type of laptop computer.The issue now is how to finance the company,with only equity or with a mix of debt and equity.Expected operating income is $620,000.Other data for the firm are shown below.How much higher or lower will the firm's expected EPS be if it uses some debt rather than only equity,i.e. ,what is EPSL - EPSU? ​
You work for the CEO of a new company that plans to manufacture and sell a new type of laptop computer.The issue now is how to finance the company,with only equity or with a mix of debt and equity.Expected operating income is $620,000.Other data for the firm are shown below.How much higher or lower will the firm's expected EPS be if it uses some debt rather than only equity,i.e. ,what is EPS<sub>L</sub> - EPS<sub>U</sub>? ​ A) $1.50 B) $2.08 C) $1.91 D) $1.67 E) $1.58


A) $1.50
B) $2.08
C) $1.91
D) $1.67
E) $1.58

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