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There Are No Taxes

Question 106

Multiple Choice

  There are no taxes. EBIT is expected to be $2.5 million, but could be as high as $3.5 million if an economic expansion occurs, or as low as $2 million if a recession occurs. All values are market values.  What is EPS under the current capital structure if there is a recession? A)  $3.33 B)  $4.17 C)  $5.00 D)  $6.25 There are no taxes. EBIT is expected to be $2.5 million, but could be as high as $3.5 million if an economic expansion occurs, or as low as $2 million if a recession occurs. All values are market values.

What is EPS under the current capital structure if there is a recession?


A) $3.33
B) $4.17
C) $5.00
D) $6.25

Correct Answer:

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