Question: Please provide answer to the problem below. Question 4 (10 points) [10 points] Albine Inc. has no debt. It has 10,000 shares of equity outstanding

Please provide answer to the problem below.

Please provide answer to the problem below. Question 4 (10 points) [10

Question 4 (10 points) [10 points] Albine Inc. has no debt. It has 10,000 shares of equity outstanding with a market price of $100. It is considering two alternative recapitalization plans. The low debt plan calls for issuing $200,000 of debt while the high debt plan would imply issuing $400,000 of debt. In both cases the cost of debt would be 10 percent. The firm does not pay any tax. Question If EBIT will be equal to $100,000, what would EPS be under each of the two recapitalization plans? Which plan do you chose? Explain and justify your decision

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