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 ?$4.4 million of debt financing at16?%interest. The? all-equity firm will have a value of ?$8.8million and 440,000 shares outstanding. The levered firm will have 220,000 shares outstanding.
a. Find the? break-even EBIT for Alpha Company using EPS if there are no corporate taxes.
b. Find the? break-even EBIT for Alpha Company using EPS if the corporate tax rate is 20?%.
c. What do you notice about these two? break-even EBITs for Alpha? Company?
a. What is the? break-even EBIT for Alpha Company using EPS if there are no corporate? taxes?
?$ ?(Round to the nearest? dollar.)