The Canterbury Coach Corporation has EBIT of $3.62 million and total capital of $20 million, which is 15% debt. There are 425,000 shares of stock outstanding which sell at book value. The firm pays 13% interest on its debt and is subject to a combined state and federal tax rate of 36%. Canterbury is contemplating a capital restructuring to either 30%, 45%, 60% or 75% debt.

At the current level of profitability, will more debt enhance results? -Select-YesNoItem 1

Calculate the Net Income, ROE, EPS and the DFL at the current and proposed structures, and display your results in a systematic table. Filling in income statement and balance sheet work in thousand dollars. For example, an answer of $1.2 thousand should be entered as 1.2, not 1,200. Round ROE, EPS, DFL to two decimal places. Enter the number of shares in whole numbers, and not in thousands. Enter all amounts as positive numbers.

INCOME STATEMENT ($000)
	Current		Proposals
	15%		30%	45%	60%	75%
	Debt		Debt	Debt	Debt	Debt
EBIT	$3,620		$3,620	$3,620	$3,620	$3,620
Interest
EBT	$		$	$	$	$
Tax
Net Income	$		$	$	$	$
BALANCE SHEET ($000)
Debt	$		$	$	$	$
Equity
Capital	$		$	$	$	$
Shares
Book Value per share	$		$	$	$	$
ROE
EPS	$		$	$	$	$
DFL