Break-even ebit, Financial Accounting

Break-Even EBIT:

Rolston Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Rolston would have 162,000 shares of stock outstanding. Under Plan II, there would be 108,000 shares of stock outstanding and $1.62 million in debt outstanding. The interest rate on the debt is 10 percent, and there are no taxes.

Requirement 1:

If EBIT is $292,000, calculate the EPS for each plan. (Do not include the dollar
signs ($). Round your answers to 2 decimal places. (e.g., 32.16))

Earnings per share under plan I $_______
Earnings per share under pan II $________

Requirement 2:

If EBIT is $1,264,000, calculate the EPS for each plan. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))

Earnings per share under plan I $_______
Earnings per share under plan II $_______

Requirement 3:

Calculate the break-even EBIT? (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 32))

Earnings before interest and corporate taxes $_______

Posted Date: 3/29/2013 4:17:08 AM | Location : United States







Related Discussions:- Break-even ebit, Assignment Help, Ask Question on Break-even ebit, Get Answer, Expert's Help, Break-even ebit Discussions

Write discussion on Break-even ebit
Your posts are moderated
Related Questions
Trustees remuneration A trustee may not receive remuneration except: 1. By order of the court, if the trust is very onerous or the services of the trustee very valuable;

Consider a worker who earns $8.00 per hour and has no other source of income.  Compare the following two transfer policies: i.  A negative income tax that sets the tax (per day)

ARG Co presently has $50m of fixed assets and long-term debt of $10m. The issue of $3m of 9% debentures will raise fixed assets by $2m of buildings and machinery. There appears to

Interest on Zeroes: Tesla Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 25-year zero coupon bonds to raise the money. The required

The return on investment has been aptly about as a primary ratio as it gives the relative net profit earned on the capital utilized. It is one particular measure where the last out

liabilities and its types

Jim owns and manages a small business, which provides an office design service, as well as buying and selling office furniture. Jim is a sole trader who manages all aspects of the

The Caltor Company gathered the following condensed data for the Year Ended December 31, 2010. Cost of goods sold $ 710,000 Net sales 1,279,000 Administrative expenses 239,000 I

SMALL BANKRUPTCIES The court may order the estate of a debtor to be administered summarily, if the debtor's assets are not likely to exceed Shs 12,000 in value.  This is known

On December 15, 2011 Risby Sales Co. sold a track of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses the installment sale method of accounting for this transact