Def expects to generate annual ebit of 1500000 from this


DEF Co has an expansion of $10 million. Two financing plans are being discussed: Plan A consists of $3 million 9.5% debt and the remaining $ 7 million raised by selling 200,000 shares of common stock at $35 per share. Plan B has $5 million debt at 10.5% and $5 million raised by selling 125,000 shares of common stock at $40 per share. DEF expects to generate annual EBIT of $1,500,000 from this project. It has a tax rate is 40%. Compute the EPS corresponding to each financing plan.

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Financial Management: Def expects to generate annual ebit of 1500000 from this
Reference No:- TGS02692143

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