50.1K

Verified Solution

Link Copied!

Van Horne financial management and policy 12th edition

in excel format breakdown solution if possible

DIGINS Suggested Answers to Odd-Numbered Problems [ pter 13-Gitman 013-22 EBIT-EPS and capital structure Data-Check is considering two capital structures. The key information is shown in the following table. Assume a 40% tax rate. Source of capital Structure B Long term deht Common stock Structure A $100,000 at 16% coupon rate 4,000 shares $200,000 at 17% coupon rate 2,000 shares Calculate two EBIT-EPS coordinates for each of the structures by selecting any two EBIT values and finding their associated EPS values. b. Plot the two capital structures on a set of EBIT-EPS a xes. c. Indicate over what EBIT range, if any, each structure is preferred. d. Discuss the leverage and risk aspects of each structure. . If the firm is fairly certain that its EBIT will exceed $75,000, which structure would you recommend? Why? manter 14--Gitman DIGINS Suggested Answers to Odd-Numbered Problems [ pter 13-Gitman 013-22 EBIT-EPS and capital structure Data-Check is considering two capital structures. The key information is shown in the following table. Assume a 40% tax rate. Source of capital Structure B Long term deht Common stock Structure A $100,000 at 16% coupon rate 4,000 shares $200,000 at 17% coupon rate 2,000 shares Calculate two EBIT-EPS coordinates for each of the structures by selecting any two EBIT values and finding their associated EPS values. b. Plot the two capital structures on a set of EBIT-EPS a xes. c. Indicate over what EBIT range, if any, each structure is preferred. d. Discuss the leverage and risk aspects of each structure. . If the firm is fairly certain that its EBIT will exceed $75,000, which structure would you recommend? Why? manter 14--Gitman

Answer & Explanation Solved by verified expert

See Answer