Business, 28.11.2019 06:31, vero5047

Round hammer is comparing two different capital structures: an all-equity plan (plan i) and a levered plan (plan ii). under plan i, the company would have 180,000 shares of stock outstanding. under plan ii, there would be 130,000 shares of stock outstanding and $1.8 million in debt outstanding. the interest rate on the debt is 6 percent, and there are no taxes.

a. if ebit is $225,000, what is the eps for each plan?

b. if ebit is $475,000, what is the eps for each plan?

c. what is the break-even ebit?

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Round hammer is comparing two different capital structures: an all-equity plan (plan i) and a lever...