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Kolby Corp. is comparing two different capital structures. Plan I would result in 1,300 shares of stock and $80,640 in debt. Plan II would result
Kolby Corp. is comparing two different capital structures. Plan I would result in 1,300 shares of stock and $80,640 in debt. Plan II would result in 2,900 shares of stock and $19,200 in debt. The interest rate on the debt is 10 percent.a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $10,500. The all-equity plan would result in 3,400 shares of stock outstanding. Which of the three plans has the highest EPS? The lowest?
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