Based on the EPS rule of thumb, company A's EPS would be enhanced if company A issues
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Based on the EPS rule of thumb, company A's EPS would be enhanced if company A issues 100m new bonds to purchase the stock of company B. Company A has a P/E of 10, an interest rate for bonds of 10% (pre-tax) and a tax rate of 40%. Interest is tax-deductible. Company B has a P/E of 20
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1259722615
9th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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