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A company has 7.24 million common shares outstanding and $63 million of debt with an interest...

A company has 7.24 million common shares outstanding and $63 million of debt with an interest rate of 5%. The company wants to raise another $50.4 million. It can do so by selling an additional 3.62 million shares of common stock (the equity plan) or by taking out a bank loan with an interest rate of 7.6% (the debt plan). The company has no preferred stock. The corporate tax rate is 24%. At what level of EBIT would the company have the same earnings per share (EPS) under either plan? Specify the answer in $ mln., to the nearest $0.01 mln., drop the $ symbol.

Blank 1. Calculate the answer by read surrounding text.

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Answer #1

Answer is 14.64 million .

You can also take this EBIT and calculate eps under both alternatives to cross check.

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