Compute the EBIT break-even point

Assignment Help Financial Management

Reference no: EM131991955

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: EM131991955

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