What is the EPS for each plan

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Question - Trapper 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 165,000 shares of stock outstanding. Under Plan II, there would be 115,000 shares of stock outstanding and $1.5 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

Required - 

a. If EBIT is $600,000, what is the EPS for each plan?

b. If EBIT is $850,000, what is the EPS for each plan?

c. What is the break-even EBIT?

Reference no: EM132855155

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