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What Happens to an All-Equity Firm's EPS When $1 Million

question 104

Multiple Choice

What happens to an all-equity firm's EPS when $1 million of 20% debt is issued and proceeds used to repurchase two-thirds of the stock if operating income equals $1.5 million and EPS were $2 when the firm was all-equity-financed? Ignore taxes.


Definitions:

Propositions

Statements in logic that express ideas or assertions, which can either be true or false.

Context

The circumstances or setting surrounding an event, statement, or idea, which can significantly affect its meaning and interpretation.

Standard Quantifier

A logical operator that specifies the quantity of specimens in the domain of discourse that satisfy a given condition.

Some

An unspecified amount or number of people or things.

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