Silverton Co. is comparing two different capital structures. Plan I would result in 8,500 shares of stock and $402,500 in debt. Plan II would result in 12,000 shares of stock and $280,000 in debt. The interest rate on the debt is 11 percent.
Assume the corporate tax rate is 34 percent.
Compute the EPS for each plan. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
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? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
EBIT $
What is the break-even level of EBIT for Plan II as compared to that for an all-equity plan? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
EBIT $
At what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
EBIT $