Coyote corporation is comparing two different capital, Ask an Expert

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Coyote 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 $3.1 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

If EBIT is $850,000, what is the EPS for each plan?

If EBIT is $1,150,000, what is the EPS for each plan?

What is the break-even EBIT?

Use M&M Proposition I to find the price per share. What is the value of the firm under each of the two proposed plans?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92308310

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