Gabe's Market Is Comparing Two Different Capital Structures

question 5

Multiple Choice

Gabe's Market is comparing two different capital structures.Plan I would result in 11,000 shares of stock and $225,000 in debt.Plan II would result in 14,000 shares of stock and $150,000 in debt.The interest rate on the debt is 8 percent.Ignoring taxes,compare both of these plans to an all-equity plan assuming that EBIT will be $45,000.The all-equity plan would result in 20,000 shares of stock outstanding.Of the three plans,the firm will have the highest EPS with _____ and the lowest EPS with ____.

• A)Plan I; Plan II
• B)Plan I; all-equity plan
• C)Plan II; Plan I
• D)Plan II; all-equity plan
• E)all-equity plan; Plan I

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Definitions:

Female Jobs

Occupations or positions that have been traditionally or statistically predominated by women, often reflecting societal norms and gender stereotypes.

Valued Less

regarded or considered as having lesser importance, worth, or significance in comparison to something else.

Technical Jobs

Occupations that require specialized knowledge and skills in areas related to science, technology, engineering, and math (STEM).

Streams of Feminism

Various ideological perspectives within feminism that focus on different issues and goals, such as liberal feminism, radical feminism, and intersectional feminism.