Figure 121: Selected Information for Crane Manufacturing Inc -Calculate an EBIT Break-Even Between a Debt Firm (DF)and an |

Multiple Choice

Figure 12.1: Selected information for Crane Manufacturing Inc.
$$\begin{array} { | l | c | c | } \hline & \text { ALL EQUTTY } & \text { EQUTYY AND DEBT } \\\hline & & \\\hline \text { Number of shares } & 500,000 & 300,000 \\\hline \text { Interest expense } & \$ 0 & \$ 100,000 \\\hline \text { Tax rate } = 30 \% & & \\\hline\end{array}$$
-Calculate an EBIT break-even between a debt firm (DF) and an all-equity firm (EF) based on the following information: DF interest = $60,000,DF number common shares = 5,000,EF number of common shares = 12,000,and tax rate = 40 percent.

A) EBIT = $234,547 and EPS = 10.35
B) EBIT = $146,312 and EPS = $7.02
C) EBIT = $102,857 and EPS = $5.14
D) EBIT = $91,217 and EPS = $4.18