Suppose that River Cruises, which currently is all-equity-financed, issues $250,000 of debt and uses the proceeds to
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Suppose that River Cruises, which currently is all-equity-financed, issues $250,000 of debt and uses the proceeds to repurchase 25,000 shares. Assume that the firm pays no taxes and that debt finance has no impact on its market value. Rework Table 16.3 to show how earnings per share and share return now vary with operating income.
Debt issued..............$250,000.00
Repurchase shares.......$25,000.00
Interest on debt...................10%
TABLE 16.3
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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