What will the earnings per share

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Case: Northern Wood Products is an all-equity firm with 15,900 shares of stock outstanding and a total market value of $353,000. Based on its current capital structure, the firm is expected to have earnings before interest and taxes of $26,500 if the economy is normal, $14,400 if the economy is in a recession, and $38,600 if the economy booms. Ignore taxes. Management is considering issuing $88,300 of debt with an interest rate of 7 percent. If the firm issues the debt, the proceeds will be used to repurchase stock. What will the earnings per share be if the debt is issued and the economy is in a recession?

Reference no: EM133290603

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