Business & Finance Homework Help

Hello!

Can you please help with the break even part? I was able to get all the answers except

for that one. I was able to confirm my answers were correct.

Byrd 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 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding and $2.6 million in debt outstanding. The interest rate on the debt is 8 percent and there are no taxes.

a.If EBIT is $575,000, what is the EPS for each plan?

b.If EBIT is $825,000, what is the EPS for each plan?

c.What is the break-even EBIT? 

A- Plan I; 3.19 Plan II; 2.82

B- Plan I; 4.58 Plan II; 4.75

Thank you!