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Jackson Inc. and Simon are two identical firms operating in identical markets. Jackson is unlevered with assets valued at $3,000 and has 175 shares of
Jackson Inc. and Simon are two identical firms operating in identical markets. Jackson is unlevered with assets valued at $3,000 and has 175 shares of stock outstanding. Simon also has $3,000 in assets and has $1,200 in debt financed at an interest rate of 5% and has 125 shares of stock outstanding. The corporate tax rate is 30%. Which of the following comes closest to the level of EBIT that would make earnings per share the same for Jackson and Simon? A. EPS is the same when EBIT = $240 B. EPS is the same when EBIT = 275 C. EPS is the same when EBIT = 210 D. EPS is the same when EBIT 310 E. EPS is the same when EBIT = 290
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