Company common shares sell at $40 a share and their estimated price-to-earnings ratio (P/E) is 32....

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Company common shares sell at $40 a share and their estimated price-to-earnings ratio (P/E) is 32....

Company common shares sell at $40 a share and their estimated price-to-earnings ratio (P/E) is 32. If Company borrows funds to repurchase shares at its after-tax cost of debt of 5%, its EPS is most likely to:
a) Increase
b) decrease
c) remain the same

business finance

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Answer 1

Answer #1

share price 40 P/E = 32 Eouning yield (ee) Xo o = 3-125/. 32 wh enever afea tax cost of debt is greafer than earnng gield, ep

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Answer 2

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Homework Answers

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Company common shares sell at $40 a share and their estimated price-to-earnings ratio (P/E) is 32....