Question
Yasmin Corporation is comparing two different capital structures, an all- equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the Yasmin
Yasmin Corporation is comparing two different capital structures, an all- equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the Yasmin would have 157,500 shares of stock outstanding. Under Plan II, there would be 63,000 shares of stock outstanding and $1.575 million in debt outstanding. The interest rate on the debt is 10 percent, and there are no taxes. Required:
(a) If EBIT is $ 184,000, Plan I's EPS is $ ________while Plan II's EPS is $ _________. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))
(b) If EBIT is $ 709,000, Plan I's EPS is $________ and Plan II's EPS is $__________ . (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16)) (c) The break-even EBIT is $ . (Do not include the dollar sign ($). Round your answer to the nearest whole dollar amount. (e.g., 32))
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