Question: EBIT-EPS and capital structure Data-Check is considering two capital structures. The key information is shown in the following table. Assume a 40% tax rate. Calculate
EBIT-EPS and capital structure Data-Check is considering two capital structures. The key information is shown in the following table. Assume a 40% tax rate. Calculate two EBIT-EPS coordinates for each of the structure by selecting any two EBIT values and finding their associate EPS values. Plot the two capital structures on a set of EBIT-EPS axes. Indicate over what EBIT ranges, if any, each structure is preferred. Discuss the leverage and risk aspects of each structure. If the firm is fairly certain that its EBIT will exceed $76,000, which structure would you recommend? why? Calculate two EBIT-EPS coordinates for each of the structure by selecting any two EBIT values and finding their associates EPS values. Complete the tables below using $50,000 and $60,000 EBIT: (Round to the nearest dollar. Round the EPS to the nearest cent.)
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