Following the borrowing of $12 and subsequent share repurchase,the value of a share for RC is closest to:

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C) EPS = (EBIT)/Shares outstanding = ($6M)/5M shares = $1.20 EPS (unlevered) V = 11ea7e60_15d4_f7db_ba34_c7fe2bea6608_TB1624_11 $12.00 = 11ea7e60_15d5_1eec_ba34_1de92438c063_TB1624_11 so r_U = .10 r_E = r_U + 11ea7e60_15d5_1eed_ba34_d9961e1d6bb7_TB1624_11 (r_U - r_D) r_E = .10 + 11ea7e60_15d5_1eee_ba34_819aa63e3b3e_TB1624_11 (.10 - .06) = .11 or 11% $12 million/$12 per share = 1 million shares repurchased, so 5M shares initially - 1M shares repurchased = 4M total shares outstanding. EPS = (EBIT - Interest)/Shares outstanding = ($6M - .06 × $12)/4M shares = $1.32 EPS V = 11ea7e60_15d5_45ff_ba34_d50484c3825f_TB1624_11 = $12.00

Following the Borrowing of $12 and Subsequent Share Repurchase,the Value