Jasper Industrial has no debt outstanding and a total market value of $216,000.Earnings before interest and taxes, EBIT, are projected to be $15,000 if economic conditions are normal.If there is strong expansion in the economy, then EBIT will be 12 percent higher.If there is a recession, then EBIT will be 15 percent lower.There are currently 8,600 shares outstanding.Ignore taxes.What is the percentage change in EPS when a normal economy slips into recession?
A)-15.5 percent
B)-15.2 percent
C)-15.0 percent
D)-16.1 percent
E)-14.8 percent

Question

Quizplus · Accepted Answer

The percentage change in EPS is the same as the percentage change in EBIT since there is no debt. The change from normal to recession is a decrease of 15%, so the percentage change in EPS is -15.0%.

Jasper Industrial Has No Debt Outstanding and a Total Market