# Earnings Per Share Calculation

Nielson Motors is currently an all equity financed firm. It expects to generate EBIT of $20 million over the next year. Currently Nielson has 8 million shares outstanding and its stock is trading at $20.00 per share. Nielson is considering changing its capital structure by borrowing $50 million at an interest rate of 8% and using the proceeds to repurchase shares. Assume perfect capital markets.

Nielson's EPS if they change their capital structure is closest to:

A. $2.90

B. $2.30

C. $2.50

D. $2.00

https://brainmass.com/business/the-time-value-of-money/earnings-per-share-calculation-471037

#### Solution Summary

Solution discusses the Earnings Per Share Calculation

$2.19