Question: Dickson Corporation is comparing two different capital structures. Plan I would result in 2 4 , 0 0 0 shares of stock and $ 8

Dickson Corporation is comparing two different capital structures. Plan I would result in 24,000 shares of stock and $82,500 in debt. Plan I would result in 18,000 shares of stock and $247,500 in debt. The interest rate on the debt is 4 percent.a . 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?Note: 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 BIT for each plan as compared to that for an all - equity plan?Note: Do not round intermediate calculations.
c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? Note: Do not round intermediate calculations.
d-1. Assuming that the corporate tax rate is 25 percent, what is the EPS of the firm?Note: 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 BIT for each plan as compared to that for an all - equity plan?Note: 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? Note: Do not round intermediate calculations.

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