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Frankline Coin, Inc

Question 2

Essay

Frankline Coin, Inc. is considering two capital structures. The key information follows. Assume a 40 percent tax rate and expected EBIT of $50,000. Frankline Coin, Inc. is considering two capital structures. The key information follows. Assume a 40 percent tax rate and expected EBIT of $50,000. (a) Calculate two EBIT-EPS coordinates for each of the structures. (b) Indicate over what EBIT range, if any, each structure is preferred. (a) Calculate two EBIT-EPS coordinates for each of the structures.
(b) Indicate over what EBIT range, if any, each structure is preferred.

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