The economy booms and the firm maintains all-equity status

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Wilton's Market is an all-equity firm with a total market value of $260,000 and 12,000 shares of stock outstanding. Management is considering issuing $60,000 of debt at an interest rate of 7 percent and using the proceeds on a stock repurchase. As an all-equity firm, management believes the earnings before interest and taxes (EBIT) will be $26,000 if the economy is normal, $8,000 if it is in a recession, and $35,000 if the economy booms. Ignore taxes. If the economy booms and the firm maintains its all-equity status, then the earnings per share (EPS) will be _____.

Reference no: EM132044611

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