Neptune Corporation has an existing capital structure that is all equity. The firm has calculated the EBIT-EPS indifference point for 2 different capital structures to finance a new project. Plan A is all debt financing and Plan B is all equity financing. Which of the following statements is correct?
a. At the EBIT-EPS indifference point Neptune will prefer Plan B
b. Plan A and Plan B result in the same EPS at the EBIT-EPS indifferent point
c. Both Plan A and Plan B increase the firm's leverage
d. Both Plan A and Plan B decrease the firm's leverage
e. At the EBIT-EPS indifference point, Neptune will prefer Plan A
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Neptune Corporation has an existing capital structure that is all equity. The firm has calculated th...
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