... bankruptcy costs? Management spending lots of money on lavish perks? 1 3-3 8 Modigliani-Miller Irrelevance Theory Value of Stock MM result Actual No leverage D/A D1 D2 1 3-3 9 Modigliani-Miller Irrelevance ... $25 ( EBIT - k dD )( - T ) EPS = Shares outstanding ($400,000 - 0.09($500,000))(0.6) = 80,000 - 20,000 = $3.55 Shares repurchase d = EBIT $400,000 TIE = = = 8.9x Int Exp $45,000 1 3-2 2 Determining ... $25 ( EBIT - k dD )( - T ) EPS = Shares outstanding ($400,000 - 0.115($750,000))(0.6) = 80,000 - 30,000 = $3.77 Shares repurchase d = EBIT $400,000 TIE = = = 4.6x Int Exp $86,250 1 3-2 3 Determining...