c) Ringlet Corporation is comparing two different capital structures. Plan I, the company would have 10,000 unit shares

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c) Ringlet Corporation is comparing two different capital structures. Plan I, the company would have 10,000 unit shares

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C Ringlet Corporation Is Comparing Two Different Capital Structures Plan I The Company Would Have 10 000 Unit Shares 1
C Ringlet Corporation Is Comparing Two Different Capital Structures Plan I The Company Would Have 10 000 Unit Shares 1 (193.23 KiB) Viewed 49 times
c) Ringlet Corporation is comparing two different capital structures. Plan I, the company would have 10,000 unit shares and RM150,000 in debt. Under Plan II, there would be 6,000 unit shares and RM250,000 in debt. The interest rate on the debt is 9% and corporate tax is 30%. Required: i. Find the EBIT EPS indifference level associated with the two financing plans. (4 marks) ii. Prepare a pro forma income statement if the earnings before interest and taxes (EBIT) is expected to be RM65,000. Which financing plan should be selected and why? (3 marks)
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