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EBIT-EPS and capital structure Data-Check is considering two capital structures. The key information is shown in the following table. Asume a 40% tax rate. Source
EBIT-EPS and capital structure Data-Check is considering two capital structures. The key information is shown in the following table. Asume a 40% tax rate.
Source of capital Structure A Structure B
Long-term debt $100,000 at 16% $200,000 at 17%
coupon rate coupon rate
Common stock 4,000 shares 2,000 shares
a. Calculate two EBIT-EPS coordinates for each of the structures by using $50,000 and $60,000 EBIT values and finding their associated EPS. You can use the following format:
Structure A Structure B
EBIT $50,000 $60,000 $50,000 $60,000
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