Question: Division Corporation is comparing two different capital structures. Plan I 1 would result in 1 5 , 3 0 0 shares of stock and $

Division Corporation is comparing two different capital structures. Plan I1 would result in 15,300 shares of stock and $180,950 in debt. Plan II would result in 12,900 shares of stock and $273,350 in debt. The interest rate on the debt is 10 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $70,000. The all-equity plan would result in 20,000 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 EBIT 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 I1 and II? Note: Do not round intermediate calculations. d-1. Assuming that the corporate tax rate is 21 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 21 percent, what are the break-even levels of EBIT 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 21 percent, when will EPS be identical for Plans I and II? Note: Do not round intermediate calculations.

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