Question
Rise Against Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company
Rise Against Corporation 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 205,000 shares of stock outstanding. Under Plan II, there would be 155,000 shares of stock outstanding and $3.10 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. If EBIT is $600,000, what is the EPS for each plan? (Round your answers to 2 decimal places.(e.g., 32.16)) If EBIT is $850,000, what is the EPS for each plan? (Round your answers to 2 decimal places.(e.g., 32.16)) What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.) |
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