Rise Against Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a...

Rise Against 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 170,000 shares of stock outstanding. Under Plan II, there would be 120,000 shares of stock outstanding and $1.60 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

a.	If EBIT is $525,000, what is the EPS for each plan? (Round your answers to 2 decimal places.(e.g., 32.16))

	EPS
Plan I	$
Plan II	$

b.	If EBIT is $775,000, what is the EPS for each plan? (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, i.e. 1,234,567.)

Break-even EBIT

$

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

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Rise Against Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a...

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