Kuchar Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered pl (Plan II). Under Plan I, the company would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.3 million in debt outstanding. The interest rate on the debt is 6 percent and there are no taxes. a. If EBIT is $200,000, 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 $450,000, what is the EPS for each plan? (Do not rour intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the break-
Kuchar Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered pl (Plan II). Under Plan I, the company would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.3 million in debt outstanding. The interest rate on the debt is 6 percent and there are no taxes. a. If EBIT is $200,000, 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 $450,000, what is the EPS for each plan? (Do not rour intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. What is the break-
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 1PEB: Brower Co. is considering the following alternative financing plans: Income tax is estimated at 40%...
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![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
155,000 shares of stock outstanding. Under Plan II,
there would be 105,000 shares of stock outstanding
and $1.3 million in debt outstanding. The interest rate
on the debt is 6 percent and there are no taxes. a. If
EBIT is $200,000, 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
$450,000, 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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F408aae2b-f5b5-4629-8973-03b2dbba7a91%2F4d6ebf8c-cda1-4cfd-96a0-d0b0d2f9968f%2Fjh525q_processed.jpeg&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
155,000 shares of stock outstanding. Under Plan II,
there would be 105,000 shares of stock outstanding
and $1.3 million in debt outstanding. The interest rate
on the debt is 6 percent and there are no taxes. a. If
EBIT is $200,000, 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
$450,000, 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.)
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