Solution-Compute the ebit break-even point

Compute the ebit break-even point

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Reference no: EM131895738

You are looking at two alternate capital structures: I is all equity and II is a levered plan.

I II

Debt $0 $3 million

Interest Rate 0 10%

Shares outstanding 240000 160000

Assume a tax rate of 20%.

a. IF EBIT is $ 300,000; compute EPS for both plans.

b. IF EBIT is $ 600,000 compute EPS for both plans.

c. Compute the EBIT break-even point.

Reference no: EM131895738

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Compute the ebit break-even point

Reference no: EM131895738

Reference no: EM131895738

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