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Break-Even EBIT Rise Against Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I,
Break-Even EBIT Rise Against 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 210,000 shares of stock outstanding. Under Plan 11, there would be 150,000 shares of stock outstanding and S2.28 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. a.If EBIT is $500,000, which plan will result in the higher EPS? b. If EBIT is $750,000, which plan will result in the higher EPS? c.What is the break-even EBIT (the EBIT to make both plans indifferent from the EPS point of view)
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