Question: Problems & Excel Simulations - Chapter 13 Saved Help Save & Exit Check 4 10 points Silverton Co. is comparing two different capital structures. Plan




Problems & Excel Simulations - Chapter 13 Saved Help Save & Exit Check 4 10 points Silverton Co. is comparing two different capital structures. Plan I would result in 8,500 shares of stock and $402.500 in debt. Plan II would result in 12,000 shares of stock and $280,000 in debt. The interest rate on the debt is 11 percent a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $54,500. The all-equity plan would result in 20,000 shares of stock outstanding Compute the EPS for each plan. (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g. 32.16.) Skipped Book EPS References Plan Plan 11 All-equity plan b. In part (a). what is the break-even level of EBIT for Plan las compared to that for an all- equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.) b. In part (a), what is the break-even level of EBIT for Plan I as compared to that for an all- equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT In part (a), what is the break-even level of EBIT for Plan Il as compared to that for an all- equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT In part (a), what is the break-even level of EBIT for Plan Il as compared to that for an all- equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT d. Assume the corporate tax rate is 34 percent. Compute the EPS for each plan. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) EPS ed Plan 1 Plan 11 All-equity plan ok mnces What is the break-even level of EBIT for Plan I as compared to that for an all-equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT What is the break-even level of EBIT for Plan II as compared to that for an all-equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT At what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) EBIT
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