Use the Information for the Question(s)below

question 74

Multiple Choice

Use the information for the question(s) below.
Assume that Rose Corporation's (RC) EBIT is not expected to grow in the future and that all earnings are paid out as dividends.RC is currently an all-equity firm.It expects to generate earnings before interest and taxes (EBIT) of $6 million over the next year.Currently RC has 5 million shares outstanding and its stock is trading for a price of $12.00 per share.RC is considering borrowing $12 million at a rate of 6% and using the proceeds to repurchase shares at the current price of $12.00.
-Following the borrowing of $12 million and subsequent share repurchase,the expected earnings per share for RC is closest to:

• A)$1.32.
• B)$1.44.
• C)$1.40.
• D)$1.20.

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Construction

The process of building or assembling infrastructure, buildings, and other physical structures.

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The act of preserving or keeping something in good condition through regular checks and repairs, or the consistent performance of necessary tasks.

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Dedicated burial grounds for military personnel and veterans, often maintained by a country's government.

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The act of serving in the armed forces of a country, either on a voluntary basis or as required by law.