Oak Farms is an unlevered firm with 4050 shares outstanding and an EBIT of 650. Corporate earnings are taxed at a rate of 35%.

Calculate EPS for Oak Farms. $

Note: Your answer should be in dollars and cents. For example, $0.99.

Suppose that Oak Farms makes a decision to partition (split) its assets into debt and equity. The firm issues $2250 of debt at a cost of 7.55%, and uses these funds to reduce the amount of equity on its books. The partition does not change the EBIT or the tax rate, but does reduce the number of shares outstanding to 3300.

Compute Oak Farms EPS after the partition. $

Answer rating: 100% (QA)

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