FIN 3030 Week-4 Assignment-3

  

This part of the project is to analyze the following capital structure plans. You will use the EBIT-EPS analysis to evaluate the two plans. One plan is all equity and one has debt and equity. 

   

Plan

Plan 1: All Equity

Plan 2: Some Debt

 

Shares of Equity

80,000

50,000

 

Debt

0

$2,000,000

 

Cost of debt

0

12%

 

Interest Expense

0

$240,000

 

Tax Rate

34%

34%

 

1. Determine the      EBIT indifference point 
2. Discuss the      implications of EBIT above and below this point 
3. You must      submit your backup in Excel or other supporting documentation showing how      answers were reached.