Use the Following Information to Answer the Question(s)below

question 15

Multiple Choice

Use the following information to answer the question(s) below.
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 choose not to change their capital structure is closest to:

• A)$2.00.
• B)$2.30.
• C)$2.50.
• D)$2.90.

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Definitions:

Homogamy

The tendency of individuals to marry or form partnerships with others who have similar social, economic, or cultural characteristics.

Romantic Partners

Individuals engaged in a relationship based on emotional and physical intimacy, love, and commitment.

Background Knowledge

Background knowledge encompasses the information, awareness, or familiarity gained through experience or education that an individual brings to a situation or task.

Homogamy

The tendency for individuals to associate and bond with similar others, especially in terms of social characteristics, values, or traits.