Comparing two different capital structures-all-equity plan

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Reference no: EM131188217

'Break-Even EBIT Yasmin Corporation is comparing two different capital structures, an all-equity plan (Pian l) and a levered plan (Plan Il). Under Plan J, Yasmin would have 170,000 shares of stock outstanding. Under Plan ll. there would be 120,000 shares of stock outstanding and $1.675 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. If EBIT is $300,000, which plan will result in the higher EPS? b. If EBIT is $600,000, which plan will result in the higher EPS? c. What is the break-even EBIT?

Reference no: EM131188217

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