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What is eps debt-eps equity

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Question - You are the CEO of a company that will manufacture two types of TV's with a required investment of $2,500,000.  You need to figure out how to finance the company, if with only equity or with a mix of debt and equity. Expected EBIT is $650,000.

What is the EPS differential between the all-equity company and a company with 60% debt to capital, what is EPS debt-EPS equity?

Interest rate for borrowing is 10% and tax rate is 20%. Assume company issues shares for $10 per share, what is EPS debt-EPS equity?

Reference no: EM133105498

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