Uptown Construction is comparing two different capital structures.Plan I would result in 16,000 shares of stock and $160,000 in debt.Plan II would result in 18,000 shares of stock and $110,000 in debt.The interest rate on the debt is 9 percent.Ignoring taxes, EPS will be identical for Plans I and II when EBIT equals which one of the following?
A)$48,550
B)$50,400
C)$69,600
D)$53,700
E)$60,750

Question

Quizplus · Accepted Answer

The Answer of Uptown Construction is comparing two different capital structures.Plan I would result in 16,000 shares of stock and $160,000 in debt.Plan II would result in 18,000 shares of stock and $110,000 in debt.The interest rate on the debt is 9 percent.Ignoring taxes, EPS will be identical for Plans I and II when EBIT equals which one of the following?
A)$48,550
B)$50,400
C)$69,600
D)$53,700
E)$60,750

Uptown Construction Is Comparing Two Different Capital Structures