Dickinson Company has $12,160,000 million in assets. Currently half of these assets are financed with long-term debt at 10.8 percent and half with common stock having a par value of $8. Ms. Park, Vice President of Finance, wishes to analyze two refinancing plans, one with more debt (D) and one with more equity (E). The company earns a return on assets before interest and taxes of 10.8 percent. The tax rate is 35 percent. Tax loss carryover provisions apply, so negative tax amounts are permissable.

Under Plan D, a $3,040,000 million long-term bond would be sold at an interest rate of 12.8 percent and 380,000 shares of stock would be purchased in the market at $8 per share and retired.

Under Plan E, 380,000 shares of stock would be sold at $8 per share and the $3,040,000 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 5.40 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 5.40 percent? Consider the current plan and the two new plans. multiple choice 1 Plan E Current Plan Plan D

b-3. Compute the earnings per share if return on assets increased to 15.8 percent. Note: Round your answers to 2 decimal places.

b-4. Which plan would be most favorable if return on assets increased to 15.8 percent? Consider the current plan and the two new plans. multiple choice 2 Plan E Current Plan Plan D

c-1. If the market price for common stock rose to $10 before the restructuring, compute the earnings per share. Continue to assume that $3,040,000 million in debt will be used to retire stock in Plan D and $3,040,000 million of new equity will be sold to retire debt in Plan E. Also assume that return on assets is 10.8 percent. Note: Round your answers to 2 decimal places.