Rise against corporation is comparing two different capital structures: an all equity plan (plan a) and a levered plan (plan b). under plan a, the company would have 210,000 shares of stock outstanding. under plan b, there would be 150,000 shares of stock outstanding and $2.28 million in debt outstanding. the interest rate on the debt is 8%, and there are no taxes. a. if ebit is s500,ooo, which plan will result in the higher eps? b. if ebit is $750,000, which plan will result in the higher eps? c. what is the break-even ebit?

a. Plan A

b. Plan B

c. $638,400

Explanation:

The formula to compute the earning per share is shown below:

Earning per share = (Net income - interest) ÷ (Number of shares)

a. For Plan A

EPS = ($500,000) ÷ (210,000 shares) = $2.38

For Plan B

EPS = ($500,000 - $182,400) ÷ (150,000 shares) = $2.12

The interest is computed below:

= $2.28 million × 8%

= $182,400)

Plan A has higher EPS

b. For Plan A

EPS = ($750,000) ÷ (210,000 shares) = $3.57

For Plan B

EPS = ($750,000 - $182,400) ÷ (150,000 shares) = $3.78

The interest is computed below:

= $2.28 million × 8%

= $182,400)

Plan B has higher EPS

c. Break-even EBIT

(EBIT) ÷ (Number of shares) = (EBIT - Interest) ÷ Number of shares

(EBIT) ÷ (210,000) = (EBIT - $182,400) ÷$150,000

After solving this,

The EBIT would be $638,400

answer///video, because samuel can show his work in real time and be better understood;