Northern Wood Products is an all-equity firm with 14,000 shares of stock outstanding and a total market value of $585,480.Based on its current capital structure,the firm is expected to have earnings before interest and taxes of $46,800 if the economy is normal,$21,200 if the economy is in a recession,and $56,000 if the economy booms.Ignore taxes.Management is considering issuing $150,000 of debt at a coupon rate of 7 percent.If the firm issues the debt,the proceeds will be used to repurchase stock.What will the earnings per share be if the debt is issued and the economy is in a recession? (Round the number of shares repurchased down to the nearest whole share.)

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The Answer of Northern Wood Products is an all-equity firm with 14,000 shares of stock outstanding and a total market value of $585,480.Based on its current capital structure,the firm is expected to have earnings before interest and taxes of $46,800 if the economy is normal,$21,200 if the economy is in a recession,and $56,000 if the economy booms.Ignore taxes.Management is considering issuing $150,000 of debt at a coupon rate of 7 percent.If the firm issues the debt,the proceeds will be used to repurchase stock.What will the earnings per share be if the debt is issued and the economy is in a recession? (Round the number of shares repurchased down to the nearest whole share.)

Northern Wood Products Is an All-Equity Firm with 14,000 Shares