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What is earnings per share under proposed capital structure

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Problem 1: An all-equity firm is about to convert its capital structure to one that is 50% debt by borrowing and repurchasing shares. Currently, there are 5,000 shares outstanding and the price per share is $59. The firm's EBIT is expected to be $43,600, in perpetuity. The interest rate on debt is 7% and there are no taxes. What is the earnings per share under the proposed capital structure?

Reference no: EM132970607

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