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Please help me answer these with the equations. Both plans 1's are correct but need the other information. Foundation, Inc., is comparing two different capital
Please help me answer these with the equations. Both plans 1's are correct but need the other information.
Foundation, Inc., is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 145,000 shares of stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding and $716,000 in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. a. If EBIT is $300,000, which plan will result in the higher EPS? b. If EBIT is $600,000, which plan will result in the higher EPS? c. What is the break-even EBITStep by Step Solution
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