Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with $2.52

Question

3 years ago

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Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with $2.52

million of debt financing at 14% interest. The all-equity firm will have a value of $4.2 million and 420 comma 000 shares outstanding. The levered firm will have 168 comma 000 shares outstanding.a. Find the break-even EBIT for Alpha Company using EPS if there are no corporate taxes.b. Find the break-even EBIT for Alpha Company using EPS if the corporate tax rate is 35%.c. What do you notice about these two break-even EBITs for Alpha Company?

Business

1 answer:

horrorfan [7] · Answer 1 · 2022-03-31T14:42:04+03:00

horrorfan [7]3 years ago

4 0

Look on jiskha you will find your answer I promise

Alpha Company is looking at two different capital​ structures, one an​ all-equity firm and the other a levered firm with ​$2.52

Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with $2.52