Question: This is the second time im posting this question because the first person who answered it was wrong. Can anyone else please help me solve
Consider a firm with an EBITDA of $17,000,000 and an EBIT of $12,500,000. The firm finances its assets with $54,000,000 debt costing 8.0 percent and 12,000,000 shares of stock selling at $6.00 per share. The firm is considering increasing its' debt by $27,000,000, using the proceeds to buy back shares of stock. The firm's tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT wil remain at $12,500,000. Calculate the EPS before and after the change in copital structure and indicate changes in EPS. (For "Change in EPS", note negative changes with a negative sign. Round your answers to 3 decimal places.)
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