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Business, 27.11.2019 02:31 zahnjoey2470

Bellwood corp. is comparing two different capital structures. plan i would result in 30,000 shares of stock and $91,500 in debt. plan ii would result in 24,000 shares of stock and $274,500 in debt. the interest rate on the debt is 6 percent.

a.
ignoring taxes, compare both of these plans to an all-equity plan assuming that ebit will be $115,000. the all-equity plan would result in 33,000 shares of stock outstanding. what is the eps for each of these plans? (do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)

b. in part (a), what are the break-even levels of ebit for each plan as compared to that for an all-equity plan? (do not round intermediate calculations.)
c. ignoring taxes, at what level of ebit will eps be identical for plans i and ii? (do not round intermediate calculations.)
d-1. assuming that the corporate tax rate is 21 percent, what is the eps of the firm?

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