NO.PZ2016021705000053
问题如下：
Devon Ltd. common shares sell at $40 a share and their estimated price-to-earnings ratio (P/E) is 32. If Devon borrows funds to repurchase shares at its after-tax cost of debt of 5 percent, its EPS is most likely to:
选项：
A.increase.
B.decrease.
C.remain the same.
解释：
B is correct.
If the P/E is 32, the earnings-to-price ratio (earnings yield or E/P) is 1/32 = 3.125 percent. When the cost of capital is greater than the earnings yield, earnings dilution will result from the buyback.
我看答案说每股收益率小于cost of capital，所以会稀释P/E，但是earning yield （E/P）也体现不了每股收益率这个概念啊。
