A ﬁrm has 30,000 shares of stock outstanding, $450,000 in debt at a 9% rate, an EBIT of $112,000, and a tax rate of 0%. What is the EPS?
A) $2.38
B) $2.51
C) $2.87
D) $3.36
E) $3.73

Question

Quizplus · Accepted Answer

To calculate EPS (Earnings Per Share), use the formula: EPS = (EBIT - Interest) / Number of Shares. Interest = $450,000 * 9% = $40,500. EPS = ($112,000 - $40,500) / 30,000 = $2.38.

A ﬁRm Has 30,000 Shares of Stock Outstanding, $450,000 in Debt