Question

FYI: THIS IS A NEW SET OF PROBLEM WITH A NEW SET OF DATA, PLEASE DO NOT PROVIDE OLD ANSWERS

Hale 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 170,000 shares of stock outstanding. Under Plan II, there would be 120,000 shares of stock outstanding and $1.6 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes.

a. If EBIT is $525,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

		EPS
Plan I	$
Plan II	$

b. If EBIT is $775,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

  

		EPS
Plan I	$
Plan II	$

c. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Break-even EBIT           $_________________

Answer 1