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Air Supply is an unlevered firm with a total market value of $806,000 with 40,000 shares of stock outstanding. The firm has expected EBIT of $35,000 if the economy is normal and $72,000 if the economy booms. The firm is considering a $100,000 bond issue with an attached interest rate of 5 percent. The bond proceeds will be used to repurchase shares. Ignore taxes. What will the earnings per share be after the repurchase if the economy booms?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92684044

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