Ebit finance | Business & Finance homework help

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.   

Connect with a professional writer in 5 simple steps

Please provide as many details about your writing struggle as possible

Academic level of your paper

Type of Paper

When is it due?

How many pages is this assigment?

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