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Foundation, Inc., is comparing two different capital structures: an all - equity plan ( Plan I ) and a levered plan ( Plan II )
Foundation, Inc., is comparing two different capital structures: an allequity plan Plan I and a levered plan Plan II Under Plan I, the company would have shares of stock outstanding. Under Plan II there would be shares of stock outstanding and $ in debt outstanding. The interest rate on the debt is percent, and there are no taxes.
a If EBIT is $ which plan will result in the higher EPS?
b If EBIT is $ which plan will result in the higher EPS?
c What is the breakeven EBIT?
Input Area:
Plan I:
Shares outstanding
Plan II:
Shares outstanding
Debt outstanding
$
Interest rate
EBIT
$
EBIT
$
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