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This part of the project is to examine the given capital structure plans. You will use the EBIT-EPS analysis to assess the two plans. One plan is all equity and one has debt and equity.

Plan 1: All Equity

Plan 2: Some Debt

Shares of Equity 80,000 50,000 Debt   $2,000,000 Cost of debt   12% Interest Expense   $240,000 Tax Rate 34%

Find out the EBIT indifference point Discuss the implications of EBIT above and below this point You should submit your backup in Excel or other supporting documentation showing how answers were reached.   

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M923611

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