Manly Manufacturing Is Comparing Two Different Capital Structures

question 37

Multiple Choice

Manly Manufacturing is comparing two different capital structures.Plan I would result in 23 000 shares and $320 000 in debt.Plan II would result in 17 000 shares and $260 000 in debt.The interest rate on the debt is 10 per cent.Ignoring taxes,EPS will be identical for Plans I and II when EBIT equals which one of the following?

• A)$9000
• B)$10 750
• C)$8550
• D)$10 400
• E)$9600

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