Vanier corporation is comparing two different capital, Ask an Expert

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Vanier 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 210,000 shares of stock outstanding. Under Plan II, there would be 150,000 shares of stock outstanding and $2.28 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

a) If EBIT is $500,000, what is the EPS for each plan?

b) If EBIT is $750,000, what is the EPS for each plan?

c) What is the break-even EBIT?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91774832

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