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:

Stomach

A hollow organ in the gastrointestinal tract that secretes acid and enzymes for food digestion.

Liver

A large, vital organ in the body that performs numerous functions including detoxification, protein synthesis, and the production of biochemicals necessary for digestion.

Liver

A large, vital organ in vertebrates that performs a wide range of functions, including detoxification, protein synthesis, and production of biochemicals necessary for digestion.

Lobes

Divisions or sections of an organ, separated by fissures or boundaries, often found in the brain, lungs, and liver.