Question: Problem 1 Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan ll). Under Plan I, the

Problem 1 Byrd Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan ll). Under Plan I, the company would have 365,000 shares of stock outstanding. Under Plan ll, there would be 245,000 shares of stock outstanding and $4.56 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes. a. If EBiT is $1.25 million, which plan will result in the higher EPS? b. If EBiT is $1.75 million, which plan will result in the higher EPS? c. What is the breakeven EBIT? Problem 2 In Problem 1, use MM Proposition l to find the price per share of equity under each of the two proposed plans. What is the value of the rm

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