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