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A company with a share price of $53 has shares outstanding of 6 million and net...

A company with a share price of $53 has shares outstanding of 6 million and net income of $20 million. The company conducts a leverage recapitalization to alter its capital structure by borrowing $3 million and using the proceeds to buy back shares. The pre-tax cost of debt is 5% and the company's tax rate is 35%.

What will be the new earnings per share after the leverage recapitalization?

Answer is 3.35 but not sure how...

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jeff jeffy answered 1 year ago
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