An All-Equity Firm as Operating Income of $1

question 43

Multiple Choice

An all-equity firm as operating income of $1.5 million and EPS of $2. If you ignore taxes, and if $1 million of 20% debt were issued with the proceeds used to repurchase two-thirds of the outstanding shares of stock, then the firm's EPS would:

• A) increase to $4.80.
• B) decrease to $3.00.
• C) decrease to $2.60.
• D)increase to $5.20.

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Definitions:

DRO Schedule

Differential Reinforcement of Other behavior (DRO) is a behavioral strategy where reinforcement is delivered for any behavior that is not a specific undesired behavior.

Differential Reinforcement

A technique that applies reinforcement selectively to specific behaviors while excluding others, aiming to encourage desirable behavior changes.

Response Covariation

A phenomenon where changes in one behavior result in changes in another behavior, suggesting a relationship between behaviors.

Differential Reinforcement

The process of reinforcing a specific behavior while also applying different reinforcement contingencies for other behaviors.