Question: A firm is comparing two different capital structures: an all-equity plan (plan I) and a levered plan (plan II). Under plan I, the company would

A firm 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 145,000 shares of stock outstanding. Under plan II, there would be 125,000 shares of stock outstanding and $716,000 in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. a. If EBIT is $300,000, what is the EPS for each plan? b. If EBIT is $600,000,

c. What is the break-even EBIT?

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