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Score: 0 of 1 pt 9 of 11 (3 complete) | HW Score: 20%, 2.2 of 11 pts P16-5 (similar to) : Question Help 0
Score: 0 of 1 pt 9 of 11 (3 complete) | HW Score: 20%, 2.2 of 11 pts P16-5 (similar to) : Question Help 0 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 $1.68 million of debt financing at 8% interest. The all-equity firm will have a value of $4.2 million and 420,000 shares outstanding. The levered firm will have 252,000 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 15%. 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.)
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