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

question 29

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 change their capital structure is closest to:

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

---

Definitions:

Philosophy

The study of the fundamental nature of knowledge, reality, and existence, often considered an academic discipline.

Physiology

The branch of biology that deals with the normal functions of living organisms and their parts.

Science

The systematic study of the structure and behavior of the physical and natural world through observation and experiment.

Social Level

refers to the degree of societal organization and integration among individuals within a community or society, impacting cultural, economic, and social dynamics.