Determine the ebit indifference point

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Reference no: EM132473142

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

Plan Plan 1: All Equity Plan 2: Some Debt

Shares of Equity 80,000 50,000

Debt 0 $2,000,000

Cost of debt 0 12%

Interest Expense 0 $240,000

Tax Rate 34% 34%

Question 1: Determine the EBIT indifference point

Question 2: Discuss the implications of EBIT above and below this point

You must submit your backup in Excel or other supporting documentation showing how answers were reached.

Reference no: EM132473142

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