Question: Consider XYZ Inc. who is comparing two different capital structures: Plan 1. an all-equity plan with 160,000 shares of stock outstanding. Plan 2 a levered

Consider XYZ Inc. who is comparing two different capital structures: Plan 1. an all-equity plan with 160,000 shares of stock outstanding. Plan 2 a levered plan with 80,000 shares of stock outstanding and $2.8 mil in debt outstanding. The interest rate on the debt is 8%, and there are no taxes. a. b. If EBIT is $350,000, which plan will result in the higher EPS? If EBIT is $500,000, which plan will result in the higher EPS? What does a higher EPS indicate? Calculate the break-even EBIT. C. d

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