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:

Ego Integrity

A sense of completeness and fulfillment achieved in late adulthood, involving the acceptance of life's experiences and the end of one's lifespan with a sense of wholeness and satisfaction.

Disciplined Subjectivity

The practice of maintaining a personal subjective perspective while adhering to rigorous standards of reasoning and evidence.

Psychohistory

A discipline that combines psychological analysis with historical events and figures to understand the past.

Erikson

Erik Erikson, a psychologist known for his theory on psychosocial development across eight stages of human life.