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Dickson Corporation is comparing two different capital structures. Plan I would result in 31,000 shares of stock and $93,000 in debt. Plan II would result

image text in transcribed Dickson Corporation is comparing two different capital structures. Plan I would result in 31,000 shares of stock and \$93,000 in debt. Plan II would result in 25,000 shares of stock and $279,000 in debt. The interest rate on the debt is 7 percent. a. Ignoring taxes, compare both of these plans to an allequity plan assuming that EBIT will be $120,000. The allequity plan would result in 34,000 shares of stock outstanding. What is the EPS for each of these plans? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. In part (a), what are the break-even levels of EBIT for each plan as compared to that for an allequity plan? (Do not round intermediate calculations.) c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations.) d-1. Assuming that the corporate tax rate is 22 percent, what is the EPS for each of the plans? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) d-2. Assuming that the corporate tax rate is 22 percent, what are the break-even levels of EBIT for each plan as compared to that for an allequity plan? (Do not round intermediate calculations.) d-3. Assuming that the corporate tax rate is 22 percent, when will EPS be identical for Plans I and II? (Do not round intermediate calculations.)

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