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A company is considering the following three financing plans: 2020/1 Plan A Plan B Plan C Common Stock: $300,000 Bond at 7.8%: $150,000 Preferred Stock

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A company is considering the following three financing plans: 2020/1 Plan A Plan B Plan C Common Stock: $300,000 Bond at 7.8%: $150,000 Preferred Stock at 8%: $150,000 Common Stock: $150,000 Common Stock: $150,000 In cach case the common stock will be sold at $ 26 per share. The expected EBIT is $ 110,000 and tax rate is 35 percent. Determine EPS and financial breakeven point for each plan. Draw EBIT-EPS graph and indicate over what EBIT range each plan is preferred. (14)

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