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Vanier Corporation is comparing two different capital structures: an all-equity plan (Plan 1) and a levered plan (Plan I
Posted: Sun May 29, 2022 6:10 pm
by answerhappygod
- Vanier Corporation Is Comparing Two Different Capital Structures An All Equity Plan Plan 1 And A Levered Plan Plan I 1 (299.94 KiB) Viewed 19 times
Vanier Corporation is comparing two different capital structures: an all-equity plan (Plan 1) and a levered plan (Plan II). Under Plan I, the
company would have 195,000 shares of stock outstanding. Under Plan II, there would be 140,000 shares of stock outstanding and $1,787,500 in debt outstanding. The interest rate on the debt is 8%, and there are no taxes. a. If EBIT is $400,000, what is the EPS for each plan? (Round the final answers to 2 decimal places. Omit $ sign in your response.) EPS Plan I Plan II $ b. If EBIT is $600,000, what is the EPS for each plan? (Round the final answers to 2 decimal places. Omit $ sign in your response.) EPS Plan I Plan II c. What is the break-even EBIT? (Do not round intermediate calculations. Omit $ sign in your response.) Break-even EBIT 69 69 $ $ 67 67 $