Question
Plan 1 Plan 2 Interest Expense $25,000 $50,000 Preferred Dividend $3,000 $1,500 Common Shares Outstanding 200,000 100,000 A) Assuming a 40% percent tax rate,what is
Plan 1 Plan 2 Interest Expense $25,000 $50,000 Preferred Dividend $3,000 $1,500 Common Shares Outstanding 200,000 100,000
A) Assuming a 40% percent tax rate,what is the financial breakeven point for each plan?
B)What is the degree of finanical leverage at a base level EBIT of $120,000 for both finaning plans? the firm has a 40% tax rate
C) what is the EPS under financing 1 ,if the firm projects EBIT of $200,000 and has a tax rate of 40%?
D) at about what level should the financial manager be indifferent to either plan?
E)Which plan is a higher degree of financial leverage and financial risk
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