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3. dar corporation is comparing two different capital structures an allequity...

# Question: dar corporation is comparing two different capital structures an allequity...

###### Question details

DAR Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 170,000 shares of stock outstanding. Under Plan II, there would be 120,000 shares of stock outstanding and $2.4 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes.  a. If EBIT is$450,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

 EPS Plan I 2.65 (Correct)$Plan II 1.68 (incorrect)$

 b. If EBIT is $700,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)  EPS Plan I 4.12(correct)$ Plan II 3.17(incorrect)\$

Please help me calculate the incorrect figures and explain the result