Purchase Solution

# Calculating EPS at different levels of EBIT

Not what you're looking for?

Rise Against 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 195,000 shares of stock outstanding. Under Plan II, there would be 145,000 shares of stock outstanding and \$2.10 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

1. If EBIT (earnings before interest and taxes) is \$550,000, what is the EPS (earnings per share) for each plan?

2. If EBIT is \$800,000, what is the EPS for each plan?

3. What is the break-even EBIT?

##### Solution Summary

Solution depicts the steps to calculate EPS at different levels of EBIT. It also determines the break-even level of EBIT.

Solution provided by:
###### Education
• BEng (Hons) , Birla Institute of Technology and Science, India
• MSc (Hons) , Birla Institute of Technology and Science, India
###### Recent Feedback
• "Thank you"
• "Really great step by step solution"
• "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
• "Thanks Again! This is totally a great service!"
• "Thank you so much for your help!"

##### Graphs and Functions

This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.

This quiz test you on how well you are familiar with solving quadratic inequalities.

##### Geometry - Real Life Application Problems

Understanding of how geometry applies to in real-world contexts