Question: Round Hammer is comparing two different capital structures: An all-equity plan (Plan and a levered plan (Plan II). Under Plan I, the company would have

 Round Hammer is comparing two different capital structures: An all-equity plan

Round Hammer is comparing two different capital structures: An all-equity plan (Plan and a levered plan (Plan II). Under Plan I, the company would have 205,000 shares stock outstanding. Under Plan II, there would be 155,000 shares of stock outstandir and $3.1 million in debt outstanding. The interest rate on the debt is 8 percent, and thei are no taxes. a. If EBIT is $600,000, what is the EPS for each plan? (Do not round intermediat calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If EBIT is $850,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) C. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) a. Plan I EPS Plan II EPS b. Plan I EPS Plan II EPS C. Break-even EBIT Ex: This is a numeric cell, so please enter numbers only

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