Cross Town Cookies is an all-equity firm with a total market value of $4,187,100.The firm has 127,500 shares of stock outstanding.Management is considering issuing $300,000 of debt at an interest rate of 6 percent and using the proceeds to repurchase shares.The projected earnings before interest and taxes are $215,600.What are the anticipated earnings per share if the debt is issued? Ignore taxes.(Round the number of shares repurchased down to the nearest whole share.)

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The anticipated earnings per share (EPS) can be calculated by first determining the number of shares repurchased and then calculating the new EPS. The number of shares repurchased is $300,000 / ($4,187,100 / 127,500) = 9,144 shares. The new number of shares outstanding is 127,500 - 9,144 = 118,356 shares. The interest expense is $300,000 * 6% = $18,000. The new earnings are $215,600 - $18,000 = $197,600. The EPS is $197,600 / 118,356 = $1.67.

Cross Town Cookies Is an All-Equity Firm with a Total