Alpha Company is looking at two different capital structures, one an all-equity firm and the other...
Alpha Company is looking at two different capital structures, one an all-equity firm and the other a levered firm with$3.52 million of debt financing at 8% interest. The all-equity firm will have a value of $8.8 million and 440,000 shares outstanding. The levered firm will have 264,000 shares outstanding.
a.What is the break-even EBIT for Alpha Company using EPS if there are no corporate taxes?
(Round to the nearest dollar.)
Homework Answers
Given,
Debt = $3.52 million or $3520000
Interest rate = 8%
Shares outstanding of all-equity firm = 440000
Shares outstanding of levered firm = 264000
Solution :-
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