A company currently has 3M shares outstanding, carries no debt, and its assets are valued on the market at $60M. The company’s financial chief proposes to raise $15M in debt at 10% annual rate for the purpose of share repurchase. Ignoring taxes, if EBIT is $8M, what are the earnings per share given the original capital structure?
A company currently has 2M shares outstanding, carries no debt, and its assets are valued on the market at $60M. The company’s financial chief proposes to raise $15M in debt at 10% annual rate for the purpose of share repurchase. Ignoring taxes, what is the breakeven EBIT?
