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Cross Town Cookies is an all-equity firm with a total market value of $740,000. The...

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Finance

Cross Town Cookies is an all-equity firm with a total market value of $740,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $173,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $66,200. What is the EPS if the debt is issued? Ignore taxes.

Multiple Choice

  • $1.25

  • $1.44

  • $1.56

  • $.98

  • $1.66

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