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Given the following table of information on Orange Inc., answer the questions: itructure Orange does not pay taxes. Its EBIT is expected to be $2.5
Given the following table of information on Orange Inc., answer the questions: itructure Orange does not pay taxes. Its EBIT is expected to be $2.5 million, but could be as high as $3.5 million if an economic expansion occurs, or as low as $2 million if a recession occurs. Required: a) How many shares are outstanding under the proposed capital structure? b) What is EPS under the current capital structure if there is a recession? c) What is EPS during an expansion for the proposed capital structure? d) What is ROE for the proposed capital structure if the expected economic state occurs? e) Do an EBIT-EPS analysis for these two capital structures to calculate the breakeven EBIT level between them and explain the significance of this number
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