Question: Silverton Co. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $310,000 in debt. Plan II would result

 Silverton Co. is comparing two different capital structures. Plan I would

Silverton Co. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $310,000 in debt. Plan II would result in 13,000 shares of stock and $217,000 in debt. The interest rate on the debt is 10 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $54,100. 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.) Plan Plan 11 All-equity plan EPS S 2.31 S2.49 S 2.71 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.) EBIT $ 620000 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 $ 33384.67 c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and 11? (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 S Plan 1 Plan II All-equity plan 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.) EBIT $ 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 $

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