A B C D E F G H J K L M N o P 1 Current Capital Structure: No Debt Recessior Expected Expansion $400,000 $800,000 $1,200,000 Proposed Capital Structure: Debt = $ 3 million Recession Expected Expansion EBIT $400,000 $800,000 $1,200,000 EBIT 2 | Assets 3 Debt 4 Equity 5 Debt/Equity Ratio 6 Share Price 7 Shares Outstanding 8 Interest rate Current $6,000,000 $0 $6,000,000 0 $20 300,000 N/A Proposed $6,000,000 $3,000,000 $3,000,000 1 $20 150,000 10% I 1 1 1 I I I I I 0 1 1 9 10 11 a) Calculate the Interest, Net income, ROE, and EPS for the current and proposed capital structure. 12 b) Calculate the Breakeven EBIT. 13 14 15 1 + 1 A B C D E F G H J K L M N o P 1 Current Capital Structure: No Debt Recessior Expected Expansion $400,000 $800,000 $1,200,000 Proposed Capital Structure: Debt = $ 3 million Recession Expected Expansion EBIT $400,000 $800,000 $1,200,000 EBIT 2 | Assets 3 Debt 4 Equity 5 Debt/Equity Ratio 6 Share Price 7 Shares Outstanding 8 Interest rate Current $6,000,000 $0 $6,000,000 0 $20 300,000 N/A Proposed $6,000,000 $3,000,000 $3,000,000 1 $20 150,000 10% I 1 1 1 I I I I I 0 1 1 9 10 11 a) Calculate the Interest, Net income, ROE, and EPS for the current and proposed capital structure. 12 b) Calculate the Breakeven EBIT. 13 14 15 1 + 1