Business, 11.12.2019 20:31 kyrarix

Reliable gearing currently is all-equity-financed. it has 15,000 shares of equity outstanding, selling at $100 a share. the firm is considering a capital restructuring. the low-debt plan calls for a debt issue of $250,000 with the proceeds used to buy back stock. the high-debt plan would exchange $450,000 of debt for equity. the debt will pay an interest rate of 12%. the firm pays no taxes.

a.
what will be the debt-to-equity ratio if it borrows $250,000? (do not round intermediate calculations. round your answer to 2 decimal places.)

debt-to-equity ratio
b.
if earnings before interest and tax (ebit) are $160,000, what will be earnings per share (eps) if reliable borrows $250,000? (do not round intermediate calculations. round your answer to 2 decimal places.)

eps $

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Reliable gearing currently is all-equity-financed. it has 15,000 shares of equity outstanding, selli...

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