21) Can i please get help with this practice question. Vanier Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). UnderPlan I, the company would have 195,000 shares of stock outstanding. Under Plan II, there would be 140,000 shares of stockoutstanding and $1,787,500 in debt outstanding. The interest rate on the debt is 8%, and there are no taxes.a. If EBIT is $400,000, what is the EPS for each plan? (Round the final answers to 2 decimal places. Omit $ sign in yourresponse.)EPSPlan I$Plan II$b. If EBIT is $600,000, what is the EPS for each plan? (Round the final answers to 2 decimal places. Omit $ sign in yourresponse.)EPSPlan I$Plan II$c. What is the break-even EBIT? (Do not round intermediate calculations. Omit $ sign in your response.)Break-even EBIT

Given, Plan 1 No.of stocks outstanding = 195,000 Plan II No.of stocks outstanding = 140,000 Plan II…

Answered: Vanier Corporation is comparing two…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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 195,000 shares of stock outstanding. Under Plan II, there would be 145,000 shares of stock outstanding and $2.1 million in debt outstanding. The interest rate on the debt is 8 percent annually, and there are no taxes. a. If EBIT is $550,000, 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 Plan II b. If EBIT is $800,000, 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 Plan II c. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) Break-even EBIT
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