What is your question? What don't you understand? Where is your solution? Do you just want someone to do your work for you? You would learn nothing that way and it would be a disservice to you. And if you turned in the answer prepared by another person as your own work you would be committing plagiarism which is unethical.

Calculate the value of the firm ($255,000), EPS and return on equity under the existing conditions. Then assume the debt is issued, which will require some interest payments, reducing net income, but you will have fewer shares of stock outstanding. Recalculate net income, EPS, and return on equity.

You will be reducing the shares outstanding by more than 25%, so your buying back stock is bound to affect its market price. You can assume that you can buy the stock of $17 per share, but you don't know what price the market will put on the stock after the change. Use the new EPS and return on equity information to decide what the price of the stock may be, so that you can estimate the value of the firm after the transactions.

It is not appropriate of you to assign your homework to others. To get help you should do the work as well as you can and provide your solution so someone can help you by pointing out where you are wrong and by explaining areas where you show weaknesses. At the very least you can explain what you don't understand so that you can get some hints on how to get started.

Saunders Inc. is an all-equity financed firm. It has 15,000 shares outstanding that sell for $17 each. The firm has an operating income of $40,000 and pays no taxes. The firm is considering issuing $70,000 in 8% debts and using the proceeds to repurchase stock. How does the following change before and after the proposed restructuring ; Value of the firm, EPS and return on equity