5

$
Price
38.00
$
V (I)
79,80,000.00
$
V (II)
79,80,000.00

6
$ $ $
a. EPS
3.90 3.71 4.00

Breakeven
EBIT
b.
$
Plan I vs.
54,000
all equity
Plan II vs. $
all equity 54,000
The break even levels of EBIT are the same because of M&M
Proposition I.

c. Breakeven EBIT: Plan I $

vs. Plan II 54,000
This break-even level of EBIT is the same as in part (b) again,
because of M&M
Proposition
(I).
$ $ $
2.34 2.23 2.40
d. EPS

Breakeven
EBIT
Plan I vs. $
all-equity 54,000
Plan II vs. $
all-equity 54,000
Plan I vs. $
Plan II 54,000

7
$
Price (I)
45.00
$
Price (II)
45.00
12

RE 17.14%

RU 11.39%

RE I 19.05%
RE II 15.22%
RE III 11.39%