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[Music] in this series of example im going to show you how to calculate the eps after share buyback so before the share buyback the companys earnings per share or eps is seven dollars and 20 cents and the company plans to buy back 100 000 shares at the current share price of 80 and the company has a total of 5 million shares outstanding the share buyback or share repurchase will be funded by deb with a after-tax cost of debt of six percent so to calculate the eps after the share buyback we will need to calculate the total earnings or the net income and then we will minus the after tax cost of borrowing okay in this case how much does a company have to borrow so since theyre going to buy back 100 000 shares at 80 so the total value of the shares we purchased will be 8 million okay which is hundred thousand times uh eighty dollars there so if they borrow eight million dollars and the after tax cost of debt is six percent then the interest expense after tax would be about four hundred