(PLEASE DON'T USE EXCEL) PW Company is comparing the following two capital structure plans:...
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Accounting
(PLEASE DON'T USE EXCEL)
PW Company is comparing the following two capital structure plans: (1) Plan 1: would result in 500,000 shares of stock and $700,000 of 8% debt. (2) Plan 2: would result in 250,000 shares of stock; $1,500,000 of 10% debt, and 50,0006%$100 face value preferred shares. Company tax rate is 21%. Required - If expected Earnings Before Interest and Tax (EBIT) is $600,000, which plan will result in the higher earnings per share (EPS) for PW Company? Show calculations. - If expected Earnings Before Interest and Tax (EBIT) is $750,000, which plan will result in the higher earnings per share (EPS)? Show calculations. - What is the break - even EBIT and EPS for PW company
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