Silverton Co. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $310,000 in debt. Plan II would result in 13,000 shares of stock and $217,000 in debt. The interest rate on the debt is 10 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $54,100. The all-equity plan would result in 20,000 shares of stock outstanding. Compute the EPS for each plan.

	EPS
Plan I	$
Plan II	$
All-equity plan	$

b. In part (a), what is the break-even level of EBIT for Plan I as compared to that for an all-equity plan?

EBIT $ In part (a), what is the break-even level of EBIT for Plan II as compared to that for an all-equity plan? EBIT $ c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? EBIT $ d. Assume the corporate tax rate is 34 percent. Compute the EPS for each plan.

	EPS
Plan I	$
Plan II	$
All-equity plan	$

What is the break-even level of EBIT for Plan I as compared to that for an all-equity plan?

EBIT $

What is the break-even level of EBIT for Plan II as compared to that for an all-equity plan? EBIT $ At what level of EBIT will EPS be identical for Plans I and II? EBIT $