Question: Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have

would have 750,000 shares of stock outstanding. Under Plan II, there would

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 750,000 shares of stock outstanding. Under Plan II, there would be 500,000 shares of stock outstanding and $8.50 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. Requirement 1: (a)Assume that EBIT is $2.3 million, compute the EPS for Plan I. $3.73 $4.24 $3.24 $3.07 $6.31 (b)Assume that EBIT is $2.3 million, compute the EPS for Plan II. $3.73 $4.24 $3.24 $3.07 $6.31 Requirement 2: (a)Assume that EBIT is $2.8 million, compute the EPS for Plan I. $3.75 $3.24 $3.73 $4.24 $3.07 (b)Assume that EBIT is $2.8 million, compute the EPS for Plan II. \begin{tabular}{|r|} \hline$3.73 \\ \hline$3.75 \\ \hline$3.24 \\ \hline$3.07 \\ \hline$4.24 \\ \hline \end{tabular} Requirement 3: What is the break-even EBIT? $2,374,376$2,040,000 Requirement 3: What is the break-even EBIT? $2,374,376$2,040,000$469,064$2,120,000$2,300,000

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