(Answered) The tannenbaum tea company wants to show the stock market

Finance

The Tannenbaum Tea Company wants to show the stock market an EPS of $3 per share, but doesn't expect to be able to improve profitability over what is reflected in the financial plan for next year. the plan is partially reproduced below:

EBIT $ 418,750

Interest $ 1,560

EBT $17,190

Tax(@ 40%) $6,876

Debt $ 13,000

Equity $ 97,000

Capital $ 110,000

number of shares = 3,700,000

Tannenbaum;s stock sells at book value. Will trading equity for debt help the firm achieve its EPS goal, and if so, what debt level will produce the desired EPS?

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