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What is pelician eps under the second structure

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Reference no: EM132583828

As the CFO of Pelican Holdings, you must choose between the following two capital structures:

1. Debt with a face value of $500 million and 40 million ordinary shares.

2. Debt with a face value of $400 million and 44 million ordinary shares.

The debt pays interest of 5% p.a. with annual compounding, in both cases. Answer the following questions, given that the corporate tax rate is 30%.

Question 1: What is Pelician's EPS under the first structure, it it's EBIT is $90 million?

Question 2: What is Pelician's EPS under the second structure, it it's EBIT is $90 million?

Question 3: What is Pelican's breakeven EBIT?

Reference no: EM132583828

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