Dickinson Company has $11,940,000 million in assets. Currently, half of these assets are financed with long-term...

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Dickinson Company has $11,940,000 million in assets. Currently,half of these assets are financed with long-term debt at 9.7percent and a half with the common stock having a par value of $8.Ms. Smith, Vice-President of Finance, wishes to analyze tworefinancing plans, one with more debt (D) and one with more equity(E). The company earns a return on assets before interest and taxesof 9.7 percent. The tax rate is 40 percent. Tax loss carryoverprovisions apply, so negative tax amounts are permissible.
     Under Plan D, a $2,985,000 millionlong-term bond would be sold at an interest rate of 11.7 percentand 373,125 shares of stock would be purchased in the market at $8per share and retired.
     Under Plan E, 373,125 shares ofstock would be sold at $8 per share and the $2,985,000 in proceedswould be used to reduce long-term debt.
a.
How would each of these plans affect earnings per share?Consider the current plan and the two new plans. (Roundyour answers to 2 decimal places.)
Current Plan
Plan D
Plan E
  Earnings per share
$
$
$
b-1.
Compute the earnings per share if the return on assets fell to4.85 percent. (Leave no cells blank - be certain to enter"0" wherever required. Negative amounts should be indicated by aminus sign. Round your answers to 2 decimal places.)
   Current Plan
Plan D
Plan E
  Earnings per share
$
$
$
b-2.
Which plan would be most favorable if the return on assets fellto 4.85 percent? Consider the current plan and the two newplans.
Current Plan
Plan D
Plan E
b-3.
Compute the earnings per share if the return on assets increasedto 14.7 percent. (Round your answers to 2 decimalplaces.)
Current Plan
Plan D
Plan E
  Earnings per share
$
$
$
b-4.
Which plan would be most favorable if the return on assetsincreased to 14.7 percent? Consider the current plan and the twonew plans.
Current Plan
Plan D
Plan E
c-1.
If the market price for common stock rose to $12 before therestructuring, compute the earnings per share. Continue to assumethat $2,985,000 million in debt will be used to retire stock inPlan D and $2,985,000 million of new equity will be sold to retiredebt in Plan E. Also assume that return on assets is 9.7 percent.(Round your answers to 2 decimal places.)
Current Plan
Plan D
Plan E
  Earnings per share
$
$
$
c-2.
If the market price for common stock rose to $12 before therestructuring, which plan would then be most attractive?
Current Plan
Plan E
Plan D

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Dickinson Company has $11,940,000 million in assets. Currently,half of these assets are financed with long-term debt at 9.7percent and a half with the common stock having a par value of $8.Ms. Smith, Vice-President of Finance, wishes to analyze tworefinancing plans, one with more debt (D) and one with more equity(E). The company earns a return on assets before interest and taxesof 9.7 percent. The tax rate is 40 percent. Tax loss carryoverprovisions apply, so negative tax amounts are permissible. Under Plan D, a $2,985,000 millionlong-term bond would be sold at an interest rate of 11.7 percentand 373,125 shares of stock would be purchased in the market at $8per share and retired. Under Plan E, 373,125 shares ofstock would be sold at $8 per share and the $2,985,000 in proceedswould be used to reduce long-term debt.a.How would each of these plans affect earnings per share?Consider the current plan and the two new plans. (Roundyour answers to 2 decimal places.)Current PlanPlan DPlan E Earnings per share$ $ $ b-1.Compute the earnings per share if the return on assets fell to4.85 percent. (Leave no cells blank - be certain to enter"0" wherever required. Negative amounts should be indicated by aminus sign. Round your answers to 2 decimal places.) Current PlanPlan DPlan E Earnings per share$ $ $ b-2.Which plan would be most favorable if the return on assets fellto 4.85 percent? Consider the current plan and the two newplans.Current PlanPlan DPlan Eb-3.Compute the earnings per share if the return on assets increasedto 14.7 percent. (Round your answers to 2 decimalplaces.)Current PlanPlan DPlan E Earnings per share$ $ $ b-4.Which plan would be most favorable if the return on assetsincreased to 14.7 percent? Consider the current plan and the twonew plans.Current PlanPlan DPlan Ec-1.If the market price for common stock rose to $12 before therestructuring, compute the earnings per share. Continue to assumethat $2,985,000 million in debt will be used to retire stock inPlan D and $2,985,000 million of new equity will be sold to retiredebt in Plan E. Also assume that return on assets is 9.7 percent.(Round your answers to 2 decimal places.)Current PlanPlan DPlan E Earnings per share$ $ $ c-2.If the market price for common stock rose to $12 before therestructuring, which plan would then be most attractive?Current PlanPlan EPlan D