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QUESTION
Crozet Corporation plans to borrow just enough money to repurchase 100,000 shares. The following information relates to the share repurchase: Shares...
Crozet Corporation plans to borrow just enough money to repurchase 100,000 shares. The following information relates to the share repurchase:
Shares outstanding before buyback: 3.1 million
Earnings per share before buyback: $4.00
Share price at time of buyback: $50
After-tax cost of borrowing: 6%
What will be Crozet's earnings per share after the buyback?
