Rise Against 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 205,000 shares of stock outstanding. Under Plan II, there would be 155,000 shares of stock outstanding and $2.30 million in debt outstanding. The interest rate on the debt is 6 percent, and there are no taxes.
a. If EBIT is $250,000, what is the EPS for each plan? (Round your answers to 2 decimal places.(e.g., 32.16))
EPS
Plan I $
Plan II $
b. If EBIT is $500,000, what is the EPS for each plan? (Round your answers to 2 decimal places.(e.g., 32.16))
EPS
Plan I $
Plan II $
c. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
Break-even EBIT $