You Are a Buy-Side Analyst Researching the Gorilla Glass Co

You are a buy-side analyst researching the Gorilla Glass Co. Gorilla plans to borrow $11 million by issuing bonds with an annual coupon of 7% and a yield to maturity of 7%. Gorilla will use the borrowed money to repurchase shares on the open market at $40 per share. You have gathered the information, shown in the table, regarding the company prior to the repurchase. You estimate that EBIT for Year 1 will be the same as reported for Year 0. Assume that the money is borrowed and the repurchase is executed at the beginning of Year 1. Gorilla Glass Co.
Dec 31, Year 0
$$\begin{array} { | c | c | } \hline \text { EBIT } & \$ 10,331,538 \\\hline \text { Tax Rate } & 35 \% \\\hline \text { Shares Outstanding } & 3,000,000 \\\hline \text { EPS } & \$ 2.5 \\\hline \text { Debt } & \$ 0 \\\hline \text { Stock Price } & \$ 40 \\\hline\end{array}$$ What is the Year 1 EPS?

A) $2.00
B) $2.28
C) $2.80
D) $3.25
E) $3.52