Sunban Corp. is comparing two different capital structures. Plan A would resul

    Sunban Corp. is comparing two different capital structures. Plan A would result in 1210 shares of stock and $18150 in debt. Plan B would
    result in 990 shares of stock and $30250 in debt. The interest rate on the debt is 11 percent.

    (a)Ignoring taxes compare both of these plans to an all-equity plan assuming that EBIT will be $11000. The all-equity plan would result in
    1540 shares of stock outstanding. Plan A has an EPS of $7.44 Plan B has an EPS of $7.75 and All-Equity Plan
    has an EPS of $7.14.

    (b) In part (a) the break-even levels of EBIT for Plans A and B are $9317 and $9317 respectively as compared to that for an all-equity plan.
    (round to 2 decimals)

    (c). Ignoring tasex EPS will be identical for Plans A and B when their EBITs are each $9317. (Round to nearest whole dollar)

    (d) Repeat parts (a) (b) and (c) assuming that the corporate tax rate is 39 percent.

    (i) EPSs for Plans A B and all-equity are $ _____ $ _____ and $ _____ respectively. (round to 2 decimal places)

    (ii) Break-even EBITs for Plans A and B compared to an all-equity plan are $ _____ and $ _____ respectively (round to nearest whole
    dollars).

    (iii) Break-even EBIT for Plan A versus Plan B: $ _____. (round to nearest whole dollar)

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