A company can borrow funds at an after-tax cost of 4.5%. The companys stock price is ($40)
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A company can borrow funds at an after-tax cost of 4.5%. The company’s stock price is \($40\) per share, earnings per share is \($2.00\), and the company has 15 million shares outstanding. If the company borrows just enough to repurchase 2 million shares of stock at the prevailing market price, that company’s earnings per share is most likely to:
A. increase.
B. decrease.
C. remain the same.
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Related Book For
Corporate Finance A Practical Approach
ISBN: 9781118217290
2nd Edition
Authors: Michelle R Clayman, Martin S Fridson, George H Troughton, Matthew Scanlan
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