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Please answer A, B, and C!! Break-even EBIT (with and without taxes). Alpha Company is looking at two different capital structures, one an all-equity firm
Please answer A, B, and C!!
Break-even EBIT (with and without taxes). Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with $1.92 million of debt financing at 8% interest. The all-equity firm will have a value of $9.6 million and 480,000 shares outstanding. The levered firm will have 384,000 shares outstanding. a. Find the break-even EBIT for Alpha Company using EPS if there are no corporate taxes. b. Find the break-even EBIT for Alpha Company using EPS if the corporate tax rate is 20%. c. What do you notice about these two break-even EBITs for Alpha Company? a. What is the break-even EBIT for Alpha Company using EPS if there are no corporate taxes? (Round to the nearest dollar.)Step by Step Solution
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