Dickinson Company has $$11,820,000$ million in assets. Currently half of these assets are financed with long$-$term debt at

$9\mathrm{.}1$ percent and half with common stock having a par value of $$8.$ Ms$.$ Park, Vice President of Finance, wishes to analyze

two reflnancing plans, one with more debt $($D$)$ and one with more equity $($E$).$ The company earns a retum on assets

before interest and taxes of $9\mathrm{.}1$ percent. The tax rate is $40$ percent. Tax loss carryover provisions apply, so negative tax

amounts are permissable.

Under Plan D$,$ a $$2,955,000$ m inlon long$-$term bond would be sold at an interest rate of $11\mathrm{.}1$ percent and $369,375$ shares

of stock would be purchased in the market at $$8$ per share and retired.

Under Plan E$,369,375$ shares of stock would be sold at $$8$ per share and the $$2,955,000$ in proceeds would be used

to reduce long$-$term debt.

a$.$ Compute earnings per share considering the current plan and the two new plans.

Note: Round your answers to $2$ decimal places.

b$-1.$ Compute the earnings per share if return on assets fell to $4\mathrm{.}55$ percent.

Note: Negative amounts should be indicated by a minus sign. Round your answers to $2$ decimal places. Leave no

cells blank be certain to enter $0$ wherever required.

b$-2.$ Which plan would be most favorable if return on assets fell to $4\mathrm{.}55$ percent? Consider the current plan and the two

new plans.

Plan D

Plan E

Current Plan

b$-3.$ Compute the earnings per share if return on assets increased to $14\mathrm{.}1$ percent.

Note: Round your answers to $2$ decimal places.

b$-4.$ Which plan would be most favorable if return on assets increased to $14\mathrm{.}1$ percent? Consider the current plan and

the two new plans.

Plan D

Plan E

Current Plan

c$-1.$ If the market price for common stock rose to $$12$ before the restructuring, compute the earnings per share.

Continue to assume that $$2,955,000$ million in debt will be used to retire stock in Plan D and $$2,955,000$ million of new

equity will be sold to retire debt in Plan E$.$ Also assume that return on assets is $9\mathrm{.}1$ percent.

Note: Round your answers to $2$ decimal places.

c$-2.$ If the market price for common stock rose to $$12$ before the restructuring, which plan would then be most

attractive?

Plan D

Current Plan

Plan E