The CFO of Yang Centers has asked you to calculate the EPS if the company were to change its capital structure from 0 percent debt to 90 percent debt. Calculate the EPS, rounded to the nearest $ 0.01, given the following information: Book value per share $ 8.75 Cost of debt 10 percent EBIT S 500,000.00 Tax Rate 30 percent Total Capital $ 4,000,000.00

d)  Calculate the after-tax Weighted Average Cost of Capital (WACC) for each capital structure.

Coldstream Corp. is comparing two different capital structures. Plan I would result in 10,000 shares of stock and $100,000 in debt. Plan II would result in 5,000 shares of stock and $200,000 in debt. The interest rate on the debt is 6 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $60,000. The all-equity plan would result in 15,000 shares of stock outstanding. What is the EPS for each of these plans? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)      EPS Plan I $   Plan II $   All equity $      b. In part (a), what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? (Do not round intermediate calculations.)       EBIT   Plan I and all-equity $   Plan II and all-equity $      c. Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations.) EBIT…

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You are given the following information concerning a firm:Assets required for operation: $5,600,000Revenues: $8,700,000Operating expenses: $7,900,000Income tax rate: 40%. Management faces three possible combinations of financing: 100% equity financing 35% debt financing with a 8% interest rate 70% debt financing with a 8% interest rate   What is the net income for each combination of debt and equity financing? Round your answers to the nearest dollar.     1 2 3 Net income $     $     $       What is the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     If the interest rate had been 16 percent instead of 8 percent, what would be the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     What is the implication of the use of financial leverage…

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A company just issued $453000 of perpetual 5% debt and used the proceeds to repurchase stock. The company expects to generate 107000 of EBIT in perpetuity. The company distributes all its earnings as dividends at the end of each year. The firm's unlevered cost of capital is 14% and the tax rate is 25%. Use APV method to calculate the value of the company with leverage. Your Answer: Answer