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Q6. Kolby Corp. is comparing two different capital structures. Plan I would result in 1300 shares of stock and $80640 debt. Plan 2 would result

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Q6. Kolby Corp. is comparing two different capital structures. Plan I would result in 1300 shares of stock and $80640 debt. Plan 2 would result in 2900 shares of stock and $19200 in debt. The interest rate on the debt is 10 percent. au Ignoring taxes, compare both of these plans to an all- equity plan assuming that EBIT will be $10500. The all- equity plan would result in 3,400 shares of stock outstanding. Which of the three plans has the highest EPS? The lowest? In part (a) what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? Is one higher than the other? Ignoring taxes when will EPS be identical for Plans 1 and 2? b

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