Plan I: Shares outstanding Debt 1,100 16,500 Plan II: Shares outstanding 900 Debt outstanding $ 27,500 Interest rate 10% a. EBIT d. Tax rate 10,000 Stock outstanding 1,400 40%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Based on the table in the figure, then make an analysis of the calculation of the Break Even EBIT value of
Plan 1 and Plan 2 capital structure policies

Plan 1:
Shares outstanding
Debt
Plan II:
Shares outstanding
Debt outstanding
Interest rate
Stock outstanding
a. EBIT
d. Tax rate
EA
1,100
16,500
900
27,500
10%
10,000
1,400
40%
Transcribed Image Text:Plan 1: Shares outstanding Debt Plan II: Shares outstanding Debt outstanding Interest rate Stock outstanding a. EBIT d. Tax rate EA 1,100 16,500 900 27,500 10% 10,000 1,400 40%
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