Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Kyle Corporation is comparing two different capital structures an allequity plan Plan I an...

Kyle Corporation is comparing two different capital structures an allequity plan Plan I and a levered plan Plan II Under Plan Ithe 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            $

 
View less »

Apr 01 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions