Uptown Construction Is Comparing Two Different Capital Structures

question 72

Multiple Choice

Uptown Construction is comparing two different capital structures.Plan I would result in 16,000 shares of stock and $160,000 in debt.Plan II would result in 18,000 shares of stock and $110,000 in debt.The interest rate on the debt is 9 percent.Ignoring taxes, EPS will be identical for Plans I and II when EBIT equals which one of the following?

• A)$48,550
• B)$50,400
• C)$69,600
• D)$53,700
• E)$60,750

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Definitions:

Coefficient Of Determination

A measure used in statistical analysis that assesses how well a model explains and predicts future outcomes, represented as a value between 0 and 1.

Dependent Variable

The variable in an experiment or study that is expected to change in response to changes in another variable known as the independent variable.

Independent Variable

A variable in an experiment that is manipulated or changed by the researcher to observe its effects on the dependent variable.

Least Squares Estimate

A statistical method used to minimize the sum of square differences between observed and estimated data points.