Explore BrainMass

Explore BrainMass

    Earnings per share at breakeven

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Quilt Shoppe is an all equity firm that has 2,500 shares of stock outstanding at a market price of $20 a share. Company management has decided to issue $10,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 8.5 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:46 pm ad1c9bdddf
    https://brainmass.com/business/accounting/earnings-share-break-even-level-249472

    Solution Summary

    A step-by-step solution is given that explains how to calculate the earnings per share at the break-even level of earnings before interest and taxes. Details on problem using Excel is also explained.

    $2.19

    ADVERTISEMENT