What is the break-even EBIT

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Reference no: EM132069108

Contrail Air, Inc., is looking at two capital structures.

Plan A is an all equity with 500,000 shares outstanding

Plan B is a levered plan with 320,000 shares outstanding and debt of $3,467,000 outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

If EBIT is $500,000, which plan will result in the higher EPS?

If EBIT is $800,000, which plan will result in the higher EPS?

What is the break-even EBIT?

Download the linked spreadsheet template and use it for your answer. Once complete, upload the template to this question. Don't forget to show your work.

Reference no: EM132069108

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