What will forecast for next? year earnings per share? be

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You are CEO of a? high-growth technology firm.You plan to raise $160 million to fund a planned expansion by issuing either new shares or new debt. With the? expansion, you expect earnings next year of $33 million. The firm currently has 11 million shares? outstanding, with a price of $64 per share. Assume perfect capital markets.

1. If you raise the $160 million by selling new? shares, what will the forecast for next? year's earnings per share? be?

2. If you raise the $160 million by issuing new debt with an interest rate of 9%?, what will the forecast for next? year's earnings per share? be?

3. What is the? firm's forward? P/E ratio? (that is, the share price divided by the expected earnings for the coming? year) if it issues? equity? What is the? firm's forward? P/E ratio if it issues? debt? How can you explain the? difference?

Reference no: EM133495954

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