Answer Happy

Des Chatels Corp. is comparing two different capital structures.
Plan I would result in 13,000 shares of stock and $130,500 in debt.
Plan II would result in 10,400 shares of stock and $243,600 in
debt. The interest rate on the debt is 10%.
a. Ignoring taxes, compare both of these plans to an
all-equity plan assuming that EBIT will be $56,000. The all-equity
plan would result in 16,000 shares of stock outstanding. What is
the EPS for each of these plans? (Round the final
answers to 2 decimal places. Omit $ sign in your
response.)
b. In part (a), what are the breakeven
levels of EBIT for each plan as compared to that for an all-equity
plan? (Do not round intermediate calculations. Omit $
sign in your response.)
c. Ignoring taxes, at what level of EBIT
will EPS be identical for Plans I and II? (Do not
round intermediate calculations. Omit $ sign in your
response.)

EBIT $

d-1 Assuming that the corporate tax rate is
40%, what is the EPS of the firm? (Round the final
answers to 2 decimal places. Omit $ sign in your
response.)
d-2 Assuming that the corporate tax rate
is 40%, what are the breakeven levels of EBIT for each plan as
compared to that for an all-equity plan? (Do not round
intermediate calculations. Omit $ sign in your
response.)
d-3 Assuming that the corporate tax rate
is 40%, when will EPS be identical for Plans I and
II? (Do not round intermediate calculations. Omit $
sign in your response.)

EBIT $