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    Suppose the same firm decided to use debt financing for 40% of its total capital structure, using debt financing of 6.5%. All other factors being equal, what would the new EPS of the firm be?

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    A firm with No debt had the following:

    EBIT - $ 2,750,000

    Taxes - $ 0

    Equity - $ 10,275,000

    Shares outstanding - $ 950,000

    A). What is the current EPS (Earnings Per Share) of this firm?

    B). Suppose the same firm decided to use debt financing for 40% of its total capital structure, using debt financing of 6.5%. All other factors being equal, what would the new EPS of the firm be?

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    https://brainmass.com/business/capital-structure-and-firm-value/total-capital-structure-debt-financing-81580

    Solution Preview

    A). What is the current EPS (Earnings Per Share) of this firm?
    *** I think the correct way is "Shares outstanding = 950,000", instead of $ 950,000. because it is a number, not a dollar

    amount.
    Current net ...

    Solution Summary

    Computations done for you to study them. The total capital structures are determined.

    $2.19

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