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# Kyle Corporation is comparing two different capital structures an allequity plan Plan I and a levered plan Plan II Under Plan I the company would have 715000 shares of stock outstanding

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 715,000 shares of stock outstanding. Under Plan II, there would be 465,000 shares of stock outstanding and \$6.75 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes.

a. Assume that EBIT is \$1.6 million. Compute the EPS for both Plan I and Plan II. (Do not round intermediate calculations and round your answers to 2 decimal places, 32.16.)

 EPS Plan I \$ Plan II \$

b. Assume that EBIT is \$3.1 million. Compute the EPS for both Plan I and Plan II. (Do not round intermediate calculations and round your answers to 2 decimal places, 32.16.)

 EPS Plan I \$ Plan II \$

c. What is the break-even EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Round your answer to the nearest whole number, e.g., 32.)

Break-even EBIT            \$

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Apr 01 2020 View more View Less