https://myindividualtutor.com/wp-content/uploads/2020/05/output-onlinepngtools-300x60.png 0 0 admin https://myindividualtutor.com/wp-content/uploads/2020/05/output-onlinepngtools-300x60.png admin2021-05-01 00:03:072021-05-01 00:03:07ebit finance
EBIT-EPS analysis ABe Forester and three of his friends from college have interested a group of venture capitalists in backing their business idea. The propsed operation would consist of a series of retail outlets to distrubute and service a full line of vacuum cleaners and accessories. These stores would be located in dallas, houston, and san antonio. to finance the new ventrue tow plans have been proposed.
Plan A is an all common equity stuructr in which 2.3 million dollars would be raised by selling 84,000 share of common stock.
Plan B would involve issuing a 1.3 million dollars in long term bonds with an effective interest rate of 11.5% plus 1.0 million would be raised by selling 43,000 shares of common stock.
The debt funds raised under plan b have no fixed maturity date, in that this amount of financila leverage is considered a permanent part of the firsm captial strucutre. Abe and his partners plan to use a 34% tax rate in their analysis and they have hired you on a consluting baisis to do the following.
A find the
EBIT indifference level assoicate with the two financial plans.
B. prepare a pro forma income statement for the EBIT level solved for Part a. that show the EPS will be the same regardless whether plan a or plan b is chosen.
A find the EBIT indifference level assoicated with the two financing plans.
The EBIT indifference level associated with the two financing plans is $___ round to the nearest dollar
Looking for solution of this Assignment?
WHY CHOOSE US?
We deliver quality original papers
|Our experts write quality original papers using academic databases.|
|We offer our clients multiple free revisions just to ensure you get what you want.|
|All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount|
|We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity|
|We will deliver your paper on time even on short notice or short deadline, overnight essay or even an urgent essay|