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Kuchar Corporation is comparing two different capital structures, an all-equity plan (Plan 1) and a levered plan (Plan II). Under Plan I, the company would
Kuchar Corporation is comparing two different capital structures, an all-equity plan (Plan 1) and a levered plan (Plan II). Under Plan I, the company would have 170,000 shares of stock outstanding. Under Plan II, there would be 120,000 shares of stock outstanding and $1.6 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. If EBIT is $525,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If EBIT is $775,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the break-even EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) a. Plan! Plan II b. Plan Plan 11 c. Break-even EBIT
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