Roger's Trucking is currently an all equity ﬁrm that has 24,000 shares of stock outstanding at a market price of $50 a share. The ﬁrm has decided to leverage its operations by issuing $280,000
Of debt at an interest rate of 8%. This new debt will be used to repurchase shares of the
Outstanding stock. The restructuring is expected to increase the earnings per share. What is the
Minimum level of earnings before interest and taxes that Roger's is expecting? Ignore taxes.
A) $72,500
B) $77,778
C) $86,667
D) $96,000
E) $101,333

Question

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The Answer of Roger's Trucking is currently an all equity ﬁrm that has 24,000 shares of stock outstanding at a market price of $50 a share. The ﬁrm has decided to leverage its operations by issuing $280,000
Of debt at an interest rate of 8%. This new debt will be used to repurchase shares of the
Outstanding stock. The restructuring is expected to increase the earnings per share. What is the
Minimum level of earnings before interest and taxes that Roger's is expecting? Ignore taxes.
A) $72,500
B) $77,778
C) $86,667
D) $96,000
E) $101,333

Roger's Trucking Is Currently an All Equity ﬁRm That Has