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Business, 27.04.2021 15:20 asiamuhammad6

Kyle 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 715,000 shares of stock outstanding. Under Plan II, there would be 465,000 shares of stock outstanding and $6.75 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes. a. Assume that EBIT is $1.6 million. Compute the EPS for both Plan I and Plan II.
b. Assume that EBIT is $3.1 million. Compute the EPS for both Plan I and Plan II.
c. What is the break-even EBIT?

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Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a le...
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