Marley's Is an Unlevered Firm with a Total Market Value

question 47

Multiple Choice

Marley's is an unlevered firm with a total market value of $220,000 and 5,000 shares of stock outstanding.The firm has expected EBIT of $10,000 if the economy is normal and $12,000 if the economy booms.The firm is considering a bond issue of $88,000 with an attached interest rate of 5.9 percent.The bond proceeds will be used to repurchase shares.Ignore taxes.What will be the earnings per share after the repurchase if the economy booms?

• A)$1.55
• B)$1.61
• C)$2.27
• D)$2.48
• E)$2.36

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Definitions:

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Training in how to help victims of disasters or other horrifying events talk about their feelings and reactions to the traumatic incidents.

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Short Term

Relating to or occurring over a short period of time.

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