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.

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Definitions:

Imitation Training

A learning method where individuals acquire new behaviors or skills by observing and replicating others' actions.

Dependence Training

Child-rearing practices that foster compliance in the performance of assigned tasks and dependence on the domestic group, rather than reliance on oneself.

Normative Orientation

The adherence to prescribed norms or rules of social behavior that are accepted within a group or society.

Acceptable Behavior

Actions or conduct considered appropriate or permissible within a certain social, cultural, or organizational context.