a. Find the EBIT indifference level associated with the two financing plans. The EBIT indifference level associated with the two financing plans is $____. (Round to the nearest dollar.) b. Prepare a pro forma income statement for the EBIT level solved for in Part a. that shows that EPS will be the same regardless whether Plan A or B is chosen. Complete the segment of the income statement for Plan A below (Round income statement amounts to the nearest dollar except the EPS to the nearest cent.) Stock Plan EBIT $________ Less: Interest Expense _________ Earnings Before Taxes ________ Less: Taxes at 35% _________ Net Income ________ Number of Common Shares ________ EPS ________ Complete the segment of the income statement for Plan B below: (Round income statement amounts to the nearest dollar except the EPS to the nearest cent.) Bond/Stock Plan _________ EBIT _________ Less: Interest Expense ______ Earnngs Before Taxes _______ Less: Taxes at 35% ________ Net Income ________ Number of Common Shares ________ EPS __________
