Reliable Gearing currently is all-equity-financed. It has 16,000 shares of equity outstanding, selling at $100 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $350,000 with the proceeds used to buy back stock. The high-debt plan would exchange $400,000 of debt for equity. The debt will pay an interest rate of 10.6%. The firm pays no taxes. a. What will be the debt-to-equity ratio after each contemplated restructuring? (Round your answers to 2 decimal places.) Debt-to-Equity Ratio Low-debt plan High-debt plan b-1. If earnings before interest and tax (EBIT) will be either $120,000 or $175,000, what will be earnings per share for each financing mix for both possible values of EBIT? (Round your answers to 2 decimal places.) Earnings Per Share Earnings Per Share EBIT Low-Debt Plan High-Debt Plan $120,000 $ $ $175,000 b-2. If both scenarios are equally likely, what is expected (i.e., average) EPS under each financing mix?(Do not round intermediate calculations. Round your answers to 2 decimal places.) Earnings Per Share Low-debt plan $ High-debt plan b-3. Is the high-debt mix preferable? No Yes c. Suppose that EBIT is $169,600. What is EPS under each financing mix? (Round your answers to 2 decimal places.) Earnings Per Share Low-debt plan $ High-debt plan
This question was answered on: Dec 18, 2020
Buy this answer for only: $18.50
This attachment is locked
We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)
Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
About this QuestionSTATUS
Dec 18, 2020EXPERT
GET INSTANT HELP/h4>
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions:
- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
NEW ASSIGNMENT HELP?
Order New Solution. Quick Turnaround
Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.
WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.