What is the breakeven ebit for james corporation

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James Corporation is comparing two different capital structures: an all equity-plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 160,000 shares of stock outstanding. Under plan II, there would be 80,000 shares of stock and $2.8 million in debt outstanding. The interest rate on debt is 8%, and there are no taxes.

What is the breakeven EBIT for James corporation?

How would you ue this breakeven information to determine whether to choose plan I or plan II?

What is(are) the limitations based solely on the breakeven EBIT to make recapitalization decision

Reference no: EM133113088

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