Finance Capital Structure Planning : Calculation of EBIT by ClassOf1


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									              Sub: Finance                                                Topic: Capital Structure Planning

              Calculation of EBIT-EPS Indifference Point
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              Emco Products has a present capital structure consisting only of common stock (10 million
              shares). The company is Planning a major expansion. At this time, the company is undecided
              between the following two financiang plans

              (Assume a 40 % marginal tax rate):

              Plan 1 (Equity financing). Under this plan, an additional 5 million shares 
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