and $2.5 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. If EBIT is $650,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If EBIT is $900,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the break-even EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) a. Plan I Plan II b. Plan I Plan II c. Break-even EBIT
and $2.5 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes. a. If EBIT is $650,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If EBIT is $900,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the break-even EBIT? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) a. Plan I Plan II b. Plan I Plan II c. Break-even EBIT
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Kuchar Corporation 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 175,000 shares of
stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding
and $2.5 million in debt outstanding. The interest rate on the debt is 8 percent and there
are no taxes.
a. If EBIT is $650,000, what is the EPS for each plan? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
b. If EBIT is $900,000, what is the EPS for each plan? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
c. What is the break-even EBIT? (Do not round intermediate calculations and enter
your answer in dollars, not millions of dollars, rounded to the nearest whole
number, e.g., 1,234,567.)
a. Plan I
Plan II
b. Plan I
Plan II
c. Break-even EBIT](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3fd61ef9-3587-4735-a2c1-cfaec8f950c1%2F1e53a589-8fdf-45fb-830b-3932d79bf1ee%2F6gg6txc_processed.png&w=3840&q=75)
Transcribed Image Text:Kuchar Corporation 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 175,000 shares of
stock outstanding. Under Plan II, there would be 125,000 shares of stock outstanding
and $2.5 million in debt outstanding. The interest rate on the debt is 8 percent and there
are no taxes.
a. If EBIT is $650,000, what is the EPS for each plan? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
b. If EBIT is $900,000, what is the EPS for each plan? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
c. What is the break-even EBIT? (Do not round intermediate calculations and enter
your answer in dollars, not millions of dollars, rounded to the nearest whole
number, e.g., 1,234,567.)
a. Plan I
Plan II
b. Plan I
Plan II
c. Break-even EBIT
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