Duval Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Duval would have 400,000 shares of stock outstanding. Under Plan II, there would be 200,000 shares of stock outstanding and $5 million in debt outstanding. The interest rate on the debt is 10%, and there are no taxes.
a. If EBIT is $600,000, which plan will result in the higher EPS?
b. If EBIT is $5.5 million, which plan will result in the higher EPS?
c. What is the break-even EBIT?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/accounting/break-even-ebit-3a3
...)EBIT 600,000 =600,000/400,000 (600,000-.10*5,000,000)/200,000
<br>Have Done all the Calculations ...