The firm maintains its all-equity status

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Wilton's Market is an all-equity firm with a total market value of $351,000 and 14,500 shares of stock outstanding. Management is considering issuing $78,000 of debt at an interest rate of 4.8 percent and using the proceeds on a stock repurchase. As an all-equity firm, management believes the earnings before interest and taxes (EBIT) will be $33,000 if the economy is normal, $6,000 if it is in a recession, and $44,000 if the economy booms. Assume the tax rate is 0. The earnings per share (EPS) will be _____ if the economy booms and the firm maintains its all-equity status.

Reference no: EM13682899

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