Question: Kuchar Corporation is comparing two different capital structures, an all - equity plan ( Plan I ) and a levered plan ( Plan II )

Kuchar Corporation is comparing two different capital structures, an all-equity plan (Plan
I) and a levered plan (Plan II). Under Plan I, the company would have 180,000 shares of
stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding
and $2.6 million in debt outstanding. The interest rate on the debt is 8 percent and ther
are no taxes.
a. If EBIT is $575,000, what is the EPS for each plan? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g.,32.16.)
b. If EBIT is $825,000, what is the EPS for each plan? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g.,32.16.)
c. What is the break-even EBIT? (Do not round intermediate calculations and enter
your answer in dollars, not millions of dollars, rounded to the nearest whole
number, e.g.,1,234,567.)
 Kuchar Corporation is comparing two different capital structures, an all-equity plan

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