love the use of financial leverage. One million dollars would be raised selling bonds wit leverage is considered to be a permanent part of the firm's capitalization, so no fixed mat b. A detailed financial analysis of the firm's prospects suggests that the long-term EBII effective interest rate of 11 percent (per annum). Under this second plan, the g $1 lion would be raised by selling common stock at the $20 price per share. The use of fina date is needed for the analysis. A 34 percent tax rate is appropriate for the analysis. Find the EBIT indifference level associated with the two financing plans. higher EPS? earnings ratio of 19 would apply. Under plan B, a price/earnings ratio of 15 would app a. be above $300,000 annually Taking this into consideration, which plan will generat c. Suppose long-term EBIT is forecast to be $300,000 per year. Under plan A, a p this set of financial relationships does hold, which financing plan would you recomme 2Q-30% leverage) Footwear, Inc., manufactures a complete line of and women's dress shoes for independent merchants. The average selling price of its fin- fixed costs of S170,000 per year. a. What is the break-even point in pairs of shoes for the company? shed product is $85 per pair. The variable cost for this same pair of shoes is $58. Footwear, Inc., what is the dollar sales volume the firm must achieve to reach the break-even point? c. What would be the firm's profit or loss at the following units of production sold: Fither e 7,000 pairs of shoes? 9,000 pairs of shoes? 15,000 pairs of shoes? given in