Silverton Co. is comparing two different capital structures. Plan I would result in 8,700 shares of...

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Finance

Silverton Co. is comparing two different capital structures.Plan I would result in 8,700 shares of stock and $399,000 in debt.Plan II would result in 12,500 shares of stock and $239,400 indebt. The interest rate on the debt is 11 percent.

a. Ignoring taxes, compare both of these plans toan all-equity plan assuming that EBIT will be $53,900. Theall-equity plan would result in 18,200 shares of stock outstanding.Compute the EPS for each plan. (Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.)
EPS
Plan I $
Plan II $
All-equity plan $

b. In part (a), what is the break-even level ofEBIT for Plan I as compared to that for an all-equity plan?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)

EBIT           $

In part (a), what is the break-even level of EBIT for Plan II ascompared to that for an all-equity plan? (Do not roundintermediate calculations and round your answer to the nearestwhole number, e.g., 32.)

EBIT           $

c. Ignoring taxes, at what level of EBIT will EPSbe identical for Plans I and II? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)

EBIT           $

d. Assume the corporate tax rate is 30percent.

Compute the EPS for each plan. (Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.)
EPS
Plan I $
Plan II $
All-equity plan $

What is the break-even level of EBIT for Plan I as compared to thatfor an all-equity plan? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)

EBIT           $

What is the break-even level of EBIT for Plan II as compared tothat for an all-equity plan? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)

EBIT           $

At what level of EBIT will EPS be identical for Plans I and II?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)

EBIT           $

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Silverton Co. is comparing two different capital structures.Plan I would result in 8,700 shares of stock and $399,000 in debt.Plan II would result in 12,500 shares of stock and $239,400 indebt. The interest rate on the debt is 11 percent.a. Ignoring taxes, compare both of these plans toan all-equity plan assuming that EBIT will be $53,900. Theall-equity plan would result in 18,200 shares of stock outstanding.Compute the EPS for each plan. (Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.)EPSPlan I$Plan II$All-equity plan$b. In part (a), what is the break-even level ofEBIT for Plan I as compared to that for an all-equity plan?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)EBIT $In part (a), what is the break-even level of EBIT for Plan II ascompared to that for an all-equity plan? (Do not roundintermediate calculations and round your answer to the nearestwhole number, e.g., 32.)EBIT $c. Ignoring taxes, at what level of EBIT will EPSbe identical for Plans I and II? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)EBIT $d. Assume the corporate tax rate is 30percent.Compute the EPS for each plan. (Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.)EPSPlan I$Plan II$All-equity plan$What is the break-even level of EBIT for Plan I as compared to thatfor an all-equity plan? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)EBIT $What is the break-even level of EBIT for Plan II as compared tothat for an all-equity plan? (Do not round intermediatecalculations and round your answer to the nearest whole number,e.g., 32.)EBIT $At what level of EBIT will EPS be identical for Plans I and II?(Do not round intermediate calculations and round youranswer to the nearest whole number, e.g., 32.)EBIT $