Question
Under a perfect capitla world with no corporate tax, a firm is considering the following two capital strucure choices: Choice 1. No debt Choice 2.
Under a perfect capitla world with no corporate tax, a firm is considering the following two capital strucure choices:
Choice 1. No debt
Choice 2. 40% debt
Firm's expected EBIT would be $3000,4000,5000 next year. You calculated BreakEven EBIT is $3700
A.Depends on EBIT, sometimes EPS under capital choice 1 is better than that under choice 2
B.EPS is the same undre two capital structures
C.EPS under capital structure choice 1(no debt) is always better than that under choice 2(40% debt)
D,EPS under capital structure choice 2(40% debt) is always better than that under choice 1(no debt)
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The Company Valuation Playbook Invest With Confidence
Authors: Charles Sunnucks
1st Edition
1838470816, 978-1838470814
