Earnings per share after the repurchase if economy booms

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Question

Wadhwani Imports is an unlevered firm with a total market value of $240,000 and 8,000 shares of stock outstanding. The firm has expected EBIT of $15,000 if the economy is normal and $27,000 if the economy booms. The firm is considering a bond issue of $63,000 with an attached interest rate of 7.5 percent. The bond proceeds will be used to repurchase shares. Ignore taxes. What will be the earnings per share after the repurchase if the economy booms?

Reference no: EM133578557

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