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AA Tours is comparing two capital structures to determine how to best finance its operations. The first option consists of all equity financing. The second
AA Tours is comparing two capital structures to determine how to best finance its operations. The first option consists of all equity financing. The second option is based on a debt-equity ratio of 1. What should AA Tours do if its expected earnings before interest and taxes (EBIT) are greater than the break-even level? Assume there are no taxes select the unlevered option since the debt-equity ratio is less than 1 select the unlevered option since its EPS is higher when expected EBIT is greater than the break-even level select the levered option since its EPS is higher when expected EBIT is greater than the break-even level select the leverage option since the expected EBIT is less than the break-even level
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