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ABC corporation is considering three alternative capital structures, which are as below: PLAN A: 1,300 shares and a debt of Rs 80,000 PLANB B: 2,900
- ABC corporation is considering three alternative capital structures, which are as below:
- PLAN A: 1,300 shares and a debt of Rs 80,000
- PLANB B: 2,900 shares and a debt of Rs 19,000
- PLAN C: All-equity plan with 3,400 shares
The firm has EBIT level of Rs 10,500, cost of debt of 10% and tax rate of 40%.
- Which of the three plans has highest EPS?
What are the break-even levels of EBIT which give same level of EPS?
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