HiLo, Inc, Doesn't Face Any Taxes and Has $100 Million in in Assets

question 2

Multiple Choice

HiLo, Inc., doesn't face any taxes and has $100 million in assets, currently financed entirely with equity. Equity is worth $50 per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below: The firm is considering switching to a 40 percent debt capital structure, and has determined that they would have to pay a 10 percent yield on perpetual debt. What will be the standard deviation in EPS if they switch to the proposed capital structure?

• A) $7.91
• B) $7.54
• C) $6.59
• D) $6.13

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Synthetic substances similar to the male hormone testosterone, used to increase muscle mass and strength, often with harmful health effects.

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The portion of an individual's body that is made up of fat cells, vital for energy storage, protection of internal organs, and regulation of hormones.