a. If EBIT is $625,000, what is the EPS for each plan? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. If EBIT is $875,000, what is the EPS for each plan? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. What is the break-even EBIT?
Foundation, Incorporated, is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under
Plan I, the company would have 190,000 shares of stock outstanding. Under Plan II, there would be 140,000 shares of stock
outstanding and $2 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.
a. If EBIT is $625,000, what is the EPS for each plan?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b. If EBIT is $875,000, what is the EPS for each plan?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
c. What is the break-even EBIT?
Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.
a. Plan I EPS
Plan II EPS
b. Plan I EPS
Plan II EPS
c. Break-even EBIT
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