Question: Please make sure the answer is correct and explain how you got them, thanks! Dickson Corporation is comparing two different capital structures. Plan I would

Please make sure the answer is correct and explain how you got them, thanks!
 Please make sure the answer is correct and explain how you

Dickson Corporation is comparing two different capital structures. Plan I would result in 24,000 shares of stock and $82.500 in debt: Pian ll would resuit in 18,000 shares of stock and $247,500 in debt. The interest rate on the debt is 4 percent. 0. lgnoring toxes, compare both of these plans to an all-equity plan assuming that E8IT will be $85,000. The all-equity plan would result in 27,000 shores of stock outstanding. What is the EPS for each of these plans? Note: Do not round intermediste colculations and round your onswers to 2 decimal ploces, e.9. 32.16. b. In part (o) whot ore the break-even levels of EBIT for each plan as compared to that for an allequity plan? Note: Do not round intermediete cakulations. c. lgnoring taxes, at what level of EBIT will EPS be identical for Pians I and II? Note: Do not round intermediote calculations. d-1. Assuming that the corporote tox rate is 25 percent, what is the EPS of the firm? Note: Do not round intermediste calculations ond round your onswers to 2 decimal places, e.9., 32.16. d.2. Assuming that the corporate tax rate is 25 percent, what are the break-even levels of EBII for each pion as compared to that for on ollequity plon? Note: Do not round intermediote calculotions. d.3. Assuming that the corporate tax rate is 25 percent, when will EPS be identical for Plans I and II? Note: Do not round intermedinte calculations. Dickson Corporation is comparing two different capital structures. Plan I would result in 24,000 shares of stock and $82.500 in debt: Pian ll would resuit in 18,000 shares of stock and $247,500 in debt. The interest rate on the debt is 4 percent. 0. lgnoring toxes, compare both of these plans to an all-equity plan assuming that E8IT will be $85,000. The all-equity plan would result in 27,000 shores of stock outstanding. What is the EPS for each of these plans? Note: Do not round intermediste colculations and round your onswers to 2 decimal ploces, e.9. 32.16. b. In part (o) whot ore the break-even levels of EBIT for each plan as compared to that for an allequity plan? Note: Do not round intermediete cakulations. c. lgnoring taxes, at what level of EBIT will EPS be identical for Pians I and II? Note: Do not round intermediote calculations. d-1. Assuming that the corporote tox rate is 25 percent, what is the EPS of the firm? Note: Do not round intermediste calculations ond round your onswers to 2 decimal places, e.9., 32.16. d.2. Assuming that the corporate tax rate is 25 percent, what are the break-even levels of EBII for each pion as compared to that for on ollequity plon? Note: Do not round intermediote calculotions. d.3. Assuming that the corporate tax rate is 25 percent, when will EPS be identical for Plans I and II? Note: Do not round intermedinte calculations

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!