Question: Rolston Corp. is comparing two different capital structures: an all-equity plan (plan I) and a levered plan (plan II). Under plan I, Rolston would have

Rolston Corp. is comparing two different capital structures: an all-equity plan (plan I) and a levered plan (plan II). Under plan I, Rolston would have 260,000 shares of stock outstanding. Under plan II, there would be 180,000 shares of stock outstanding and $2.7 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes. a. If EBIT is $730,000, calculate the EPS for each plan. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) Earnings per share under plan I $ Earnings per share under plan II $ b. If EBIT is $1,460,000, calculate the EPS for each plan. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) Earnings per share under plan I I $ Earnings per share under plan II $ c. Calculate the break-even EBIT. (Do not round intermediate calculations. Enter the answer in dollars. Omit $ sign in your response.) Break-even EBIT $

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