Problem 4. Break-Even EBIT Yasmin Corporation is comparing Ovo different capital structures, an all-equity plan (Pian l) and a levered plan (Plan Il). Under Plan J, Yasmin would have 170,000 shares of stock outstanding. Under Plan ll. there would be 120,000 shares of stock outstanding and $1.675 million 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 EBIT? 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 EBIT?

Problem 5. MM and Stock Value In Problem 4, use MM Proposition Ito find the price per share of equity under each of the two proposed plans. What is the value of the firm? (They are asking me to use Problem 4 above to answer this question)