Premier Stonework’s shareholders believe that paying off the company’s debt of $10 million with a new stock issue will improve their EPS. Premier’s EPS is currently $7.40. There are 1.6 million shares outstanding that sell for $25 each. Premier’s tax rate is 21% and the interest rate on its debt is 6%. What would the EPS be if Premier issued new shares and used the proceeds to retire its debt? Are the shareholders correct in thinking that EPS would go up?