Breakeven EBIT
Discipline: Accounting
Type of Paper: Creative writing
Academic Level: High school
Paper Format: APA
Question
Breakeven EBIT Sanborn Corp. is comparing two different capital structures. Plan I would result in 14,000 shares of stock and $95,000 in debt. Plan II would result in 8,000 shares of stock and $190,000 in debt. The interest rate on the debt is 9 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $80,000. The all-equity plan would result in 20,000 shares of stock outstanding. What is the EPS for each of these plans? Plan I b. In part (a), what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? Plan I and all-equity c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? d-1. Assuming that the corporate tax rate is 40%, what is the EPS of the firm? Plan I d-2. Assuming that the corporate tax rate is 40%, what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? Plan I and all-equity d-3. Assuming that the corporate tax rate is 40%, at what level of EBIT will EPS be identical for Plans I & II? https://myhomeworkwriters.com/blog/write-transition-sentences-for-essays/
Plan II
All Equity
Plan II and all-equity
Plan II
All Equity
Plan II and all-equity