The capital structure data of RBC factory in the beginning of year 2021 is reported below...
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The capital structure data of RBC factory in the beginning of year 2021 is reported below Total Capital: $5000 Million Debt @10% interest: 65% Equity 35% Price per share $100 Tax rate: 30% If the company is planning to increase debt in future without changing the total capital usage (equity capital is decreased proportionately), what should be the break even EBIT to maintain the same level of EPS in all levels of debt usage. Analyse your results and comment. The capital structure data of RBC factory in the beginning of year 2021 is reported below Total Capital: $5000 Million Debt @10% interest: 65% Equity 35% Price per share $100 Tax rate: 30% If the company is planning to increase debt in future without changing the total capital usage (equity capital is decreased proportionately), what should be the break even EBIT to maintain the same level of EPS in all levels of debt usage. Analyse your results and comment.
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Answer rating: 100% (QA)
To determine the breakeven EBIT Earnings Before Interest and Taxes required to maintain the same lev... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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