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ABC Corporate is comparing two different capital structures. Plan I would result in 1200 shares...

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Finance

ABC Corporate is comparing two different capital structures. Plan I would result in 1200 shares of stock and $15, 000 in debt. Plan II would result in 1000 shares of stock and $28,000 in debt. The interest rate on debt is 8%. Ignoring taxes, what is the break-even EBIT (that makes EPS equal)? If the company expects to make EBIT of $10,000, which plan should they choose? Why?

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