Question: Dexter's is an unlevered firm with a total market value of $348,000 with 20,000 shares of stock outstanding. The firm has expected EBIT of $27,500 if the economy is normal and $32,000 if the economy booms. The firm is considering a bond issue of $69,600 with an attached interest rate of 6 percent. The bond proceeds will be used to repurchase shares. The tax rate is 35 percent. Compute the EPS after the repurchase for both a normal and a boom economy. What is the percentage increase in EPS if the economy booms rather than being normal?