Problem Spreadsheet Problem: Income Statement LG
Consider a firm with an EBITDA of $ and an EBIT of $ The firm finances its assets
with $ debt costing percent all of which is tax deductible and shares of stock
selling at $ per share. The firm is considering increasing its debt by $ using the proceeds
to buy back shares of stock. The firm's tax rate is percent. The change in capital structure will have no
effect on the operations of the firm. Thus, EBIT will remain at $
Calculate the EPS before and after the change in capital structure and indicate changes in EPS.
Note: For "Change in EPS", note negative changes with a negative sign. Round your answers to
decimal places.
