Break-even EBIT (with ?taxes).
Beta, Gamma, and Delta Companies are similar in every way except for their capital structures. Beta is an all-equity firm with $3,600,000 of value and 100,000 shares outstanding. Gamma is a levered firm with the same value as? Beta, but $1,080,000 in debt at 5% and 70,000 shares outstanding. Delta is a levered firm with the same value as both Beta and Gamma with $2,160,000 in debt at 13% and 40,000 shares outstanding. What are the break-even EBITs for Beta and Gamma, Beta and Delta, and Gamma and Delta Companies if the corporate tax rate is 35% for all three companies?
What is the break-even EBIT for Beta and Gamma companies? (Round to the nearest dollar.) ___________
What is the break-even EBIT for Beta and Delta companies? (Round to the nearest dollar.) ____________