Question

Dar 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 190,000 shares of stock outstanding. under plan ii, there would be 140,000 shares of stock outstanding and $2.8 million in debt outstanding. the interest rate on the debt is 6 percent, and there are no taxes.
a. if ebit is $275,000, what is the eps for each plan? (do not round intermediate calculations and round your answers to 2 decimal places,

e.g., 32.16.) eps plan i $ 1.45 plan ii $ 2.55

b. if ebit is $525,000, what is the eps for each plan? (do not round intermediate calculations and round your answers to 2 decimal pla

Answer 1

a. if ebit is $275,000, what is the eps for each plan? (do not round intermediate calculations and round your answers to 2 decimal places,