A Company wishes to determine an appropriate capital structure. There is only one financial option (plan) for the company: 30% corporate bond (6% interest rate), 60% common stock and 10% preferred stock (4% dividend rate). The company is considering a $10 million expansion program with the financial plan. The company has currently 100,000 shares of common stock outstanding with a market price of $50 per share. The corporate tax rate is 20%.

For an expected EBIT level is $3 million, compute the earnings per share (EPS) for the financial plan. 

Answer rating: 100% (QA)

Based on the details provided we can calculate the earnings per share EPS for the financial plan as ... View the full answer