Question: Kolby Corp. is comparing two different capital structures. Plan I would result in 28,000 shares of stock and $88,500 in debt. Plan II would result

Kolby Corp. is comparing two different capital structures. Plan I would result in 28,000 shares of stock and $88,500 in debt. Plan II would result in 22,000 shares of stock and $265,500 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 $105,000. The all-equity plan would result in 31,000 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 II? (Do not round intermediate calculations.) d-1. Assuming that the corporate tax rate is 24 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 24 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 24 percent, when will EPS be identical for Plans I and II? (Do not round intermediate calculations.) c. a. Plan 1 EPS Plan II EPS All equity EPS b. Plan I and all-equity break-even EBIT Plan II and all-equity break-even EBIT C. Plan I and Plan Il break-even EBIT d-1. Plan I EPS RO . ignoring taxes, at what level of t Will be identical tor Man round intermediate calculations.) d-1. Assuming that the corporate tax rate is 24 percent, what is the EP plans? (Do not round intermediate calculations and round your decimal places, e.g., 32.16.) d-2. Assuming that the corporate tax rate is 24 percent, what are the br of EBIT for each plan as compared to that for an all-equity plan? (D intermediate calculations.) d-3. Assuming that the corporate tax rate is 24 percent, when will EPS b Plans I and I? (Do not round intermediate calculations.) a Plan EPS Plan II EPS Al equity EPS b. Plan and all-equity break-even EBIT Plan and all-equity break-even EBIT c. Plan and Plan Il break-even EBIT d-1. Plan EPS Plan EPS Al equity EPS d-2. Plan and aloquity break even EBIT Plan land all-equity break-even EBIT - Plan Plan breskeven EBIT 2 3 $ 4 5 6 W E R T Y 1. S DF G
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