Question: Dickson Corporation is comparing two different capital structures, Plan I would result in 24,000 shares of stock and $82,500 in debt. Plan ll would result
Dickson Corporation is comparing two different capital structures, Plan I would result in 24,000 shares of stock and $82,500 in debt. Plan ll would result in 18,000 shares of stock and $247,500 in debt. The interest rate on the debt is 4 percent. a. C. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $85,000. The all-equity plan would result in 27.000 shares of stock outstanding. What is the EPS for each of these plans? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. In part (a), what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? (Do not round intermediate calculations.) Ignoring taxes, at what level of EBIT Will EPS be identical for Plans I and 11? (Do not round intermediate calculations.) d-1. Assuming that the corporate tax rate is 25 percent, what is the EPS for each of the plans? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d-2. Assuming that the corporate tax rate is 25 percent, what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? (Do not round intermediate calculations.) d-3. Assuming that the corporate tax rate is 25 percent, when will EPS be identical for Plans I and II? (Do not round intermediate calculations.) a. Plan | EPS a. Plan II EPS a. All-equity EPS b. Plan I and all-equity break-even EBIT b. Plan II and all-equity break-even EBIT c. Plan I and Plan Il break-even EBIT d-1. Plan I EPS d-1. Plan II EPS d-1. All-equity EPS d-2. Plan I and all-equity break-even EBIT d-2. Plan II and all-equlty break-even EBIT d-3. Plan I and Plan Il break-even EBIT
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