What is the eps for each of the plans

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Problem 1: Massey Corp. is considering a new capital structure. The new Levered Plan would result in 48,000 shares of stock and $200,000 in debt. The interest rate on the debt is 6 percent. Compare this plans to the current all-equity plan assuming that EBIT will be $150,000. The all-equity plan has 60,000 shares of stock outstanding. Assuming that the corporate tax rate is 40 percent, what is the EPS for each of these plans? What is the breakeven EBIT?

Reference no: EM132829819

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