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Company XYZ's annual EBIT is $12,000. The number of shares in All-Equity plan is 1,500. The number of shares in Equity & Debt plan is

Company XYZ's annual EBIT is $12,000.

The number of shares in All-Equity plan is 1,500.

The number of shares in Equity & Debt plan is 1,200. The amount of debt in this plan would be $16,500.

The interest will be paid at the rate of 12%.

Tax rate is 0%.

Find the price per share.

Calculate the EPS for each plan. Which plan has higher EPS? Why?

Find the break-even level of EBIT (which give same EPS under both plans).

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