Answer:
The EPS in recession is 2.14 $/share.
Explanation:
If there is a recession, EBIT will be 15% lower than $74,700.
That means an EBIT of $74,700*(1-0.15)=$63,495.
The net income that will be paid in dividends is
Net income = EBIT*(1-tax rate) = $ 63,495 * (1-0.34) = $ 41,906.7
If there are 19,600 shares of stock outstanding and no preferred dividends, the EPS can be calculated as
EPS = (Net dividend pay / common shares) = 41,906.7 / 19,600
EPS = 2.14 $/share.
