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 shares of stock and $ in debt. Plan I would result in shares of stock and $ in debt. The interest rate on the debt is percent.a Ignoring taxes, compare both of these plans to an all equity plan assuming that EBIT will be $ The all equity plan would result in shares of stock outstanding.
What is the EPS for each of these plans?Note: Do not round intermediate calculations and round your answers to decimal places, eg
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 Assuming that the corporate tax rate is percent, what is the EPS of the firm?Note: Do not round intermediate calculations and round your answers to decimal places, eg
d Assuming that the corporate tax rate is 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 Assuming that the corporate tax rate is percent, when will EPS be identical for Plans I and II Note: Do not round intermediate calculations.
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