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Business, 02.12.2021 01:00 Daud2020

James 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 160,000 shares of stock outstanding. Under Plan II, there would be 80,000 shares of stock outstanding and $2.8 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. Required:
a. If EBIT is $350,000, Plan I's EPS is $ while Plan II's EPS is $.
b. If EBIT is $500,000, Plan I's EPS is $ and Plan II's EPS is $ .

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