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In a perfect capital world with no corporate tax: firm B currently has no debt. It has 24,000 shares outstanding and the price per share
In a perfect capital world with no corporate tax: firm B currently has no debt. It has 24,000 shares outstanding and the price per share is $28. Manager is considering to change firm's capital structore to a new one with 30% debt, using borrowed money to buy back stocks. The cost of debt is 5%. Assume there is no corporate tax. Firm maintain 100 percent dividend payout policy. The firm expects to generate a EBIT of $68,000 a year forever. . What is EPS under current capital structure? (Format and round to two decimals, for example: 1.20 How much is the interest expense under proposed capital structure ?( Format and round to whole dollar amount, NO decimals, for example: 1234) What is EPS under proposed new capital structure? (Format and round to two decimals, for example: 1.20) (Format and round to whole dollar amount, NO decimals, for example: 1234) Find out Break-even EBIT, that is, the EBIT that makes EPS under current and proposed capital structure equal
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