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Chitown has $20 million in assets. it is considering a 50 -percent debt/asset ratio vs.its current...

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Finance

Chitown has $20 million in assets. it is considering a 50-percent debt/asset ratio vs.its current 20% debt/asset ratio. Debtcarries interest charges of 12 percent and shares sell for $20 pershare.

A. What is the number of shares under each plan?

B. assuming a 40 - percent tax rate, find the level of EBIT atwhich both plans will have the same EPS?

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Chitown has $20 million in assets. it is considering a 50-percent debt/asset ratio vs.its current 20% debt/asset ratio. Debtcarries interest charges of 12 percent and shares sell for $20 pershare.A. What is the number of shares under each plan?B. assuming a 40 - percent tax rate, find the level of EBIT atwhich both plans will have the same EPS?

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