What happens to an all-equity firm eps

Reference no: EM13290287

What happens to an all-equity firm's EPS when $1 million of 20% debt is issued and proceeds used to repurchase two-thirds of the stock if operating income equals $1.5 million and EPS were $2 when the firm was all-equity-financed? Ignore taxes.

a. EPS increase to $2.60.
b. EPS increase to $3.00.
c. EPS increase to $4.80.
d. EPS increase to $5.20.

Reference no: EM13290287

Questions Cloud

Creative and innovative solutions for society''s problems : It is generally understood that social entrepreneurs are people with creative and innovative solutions for society's problems. They are possessed by their ideas and are committed to changing society for the better. Perform an Internet search to read ..

For how long will the flash light provide illumination : A 9-V flashlight battery has a rating of 1.8 kWh. If the bulb draws a current of 100mA when lit: determine the following: (a) For how long will the flash light provide illumination

How much time do you have to move out of the way : A building is being knocked down with a wrecking ball, which is a big metal sphere that swings on a 10-m-long cable. How much time do you have to move out of the way

Evaluate what is the ph at the equivalence point : We are titrating 27.00 mL of 0.2501 M hypobromous acid (HOBr, Ka = 2.000x10?9) with 0.5200 M LiOH. What is the pH at the equivalence point

What happens to an all-equity firm eps : What happens to an all-equity firm's EPS when $1 million of 20% debt is issued and proceeds used to repurchase two-thirds of the stock if operating income equals $1.5 million and EPS were $2 when the firm was all-equity-financed? Ignore taxes.

How much energy does the motor deliver in one hour : A unit of power often used for electric motors is the horse power (hp), which equals 746W. A small electric car is equipped with a 40-hp electric motor. How much energy does the motor deliver in one hour

For u.s. firms what source of capital is used the least : For U.S. firms, what source of capital is used the least?

What is plasti-tech wacc : Plasti-tech's common stock trades at $15.00 per share and its most recent dividend was $1.00. Future dividends are expected to grow by 4%. If the tax rate is 34%, what is Plasti-tech's WACC?

How would the potential and electric field distribution be : A DC voltage of 10 V is applied across a parallel platecapacitor with a 2 cm separation between the plates. Knowing that the potential field distribution inside the capacitor is linear, plot the potential and electric fields inside the capacitor.

User Account

All Pages