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Dickinson Company has $12,180,000 milion in assets. Currently half of these assets are financed with long-term debt at 10.9 percent and half with common stock

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Dickinson Company has $12,180,000 milion in assets. Currently half of these assets are financed with long-term debt at 10.9 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 10.9 percent. The tax rate is 40 percent. Tax loss carryover provisions apply, so negative tax amounts are permissable. Under Plan D,a$3,045,000 million long term bond would be sold at an interest rate of 12.9 percent and 380,625 shares of stock would be purchased in the market at $8 per share and retired. Under Plan E. 380.625 shares of stock would be sold at $8 per share and the $3.045.000 in proceeds would be used to reduce longterm debt: 0. Compute earnings per share considering the current plan and the two new plans. Note: Round your answers to 2 decimal ploces. b-1. Compute the earnings per share if return on assets fell to 5.45 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 O wherever required. b-2. Which plan would be most favorable if return on assets fell to 5.45 percent? Consider the current plan and the two new plans. Plan E Current Plan Plan D b-3. Compute the earnings per share if return on assets increased to 15.9 percent. Note: Round your answers to 2 decimel places. b.4. Which plan would be most favorable if return on assets increased to 15.9 percent? Consider the current plan and the two new plans. Current Plan Plan E Plan D c-1. If the market price for common stock rose to $12 before the restructuring. compute the earnings per share. Continue to assume that $3,045,000 million in debt will be used to retire stock in Plan D and $3,045,000 million of new equity will be sold to retire debt in Plan E. Also assume that return on assets is 10.9 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 Plan E Current Plan

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