Question: please help with C-break even EBIT Trapper Corporation is comparing two different capital structures, an all equity plan (Plan 1) and a levered plan (Plan
Trapper Corporation is comparing two different capital structures, an all equity plan (Plan 1) and a levered plan (Plan II). Under Plan I, the company would have 175,000 shares of stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding and $17 million in debt outstanding. The interest rate on the debt is 5 percent, and there are no taxes a. If EBIT is $325,000, 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 $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.) c. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Answer is not complete. a. > $ 1.86 1.92 $ b. Plan I EPS Plan II EPS Plan I EPS Plan ll EPS Break-even EBIT S 3.29 S 3.92 C
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