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  • Excel Solution For BMW Corporation Problem (EPS Calculations)

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    BMW Corporation is comparing two different capital structures, an alli equity plan (Plan I) and a levered plan (Plan II). Under Plan I, BMW would have 265,000 shares of stock outstanding. Under Plan II there would be 185,000 shares of stock outstanding and $2.8 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes

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    Excel Solution for BMW Corporation Problem (EPS calculations)

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    BMW Corporation is comparing two different capital structures, an alli equity plan (Plan I) and a levered plan (Plan II). Under Plan I, BMW would have 265,000 shares of stock outstanding. Under Plan II there would be 185,000 shares of stock outstanding and $2.8 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes

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    © All Rights Reserved
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    13 views1 page

    Excel Solution For BMW Corporation Problem (EPS Calculations)

    Uploaded by

    mobinil1
    BMW Corporation is comparing two different capital structures, an alli equity plan (Plan I) and a levered plan (Plan II). Under Plan I, BMW would have 265,000 shares of stock outstanding. Under Plan II there would be 185,000 shares of stock outstanding and $2.8 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 1

    BMW Corporation

    Interest Rate

    Corporation
    Number of Shares
    Debt
    Interest

    10%
    Plan A
    (ALL Equity)
    265,000
    $0
    $0
    Plan A
    (ALL Equity)

    a) EBIT
    EBIT
    Less; Interest
    Net Income
    Number of Shares Outstanding
    EPS

    $750,000
    $750,000
    $0
    $750,000
    265,000
    $2.83
    Plan A
    (ALL Equity)

    b) EBIT
    EBIT
    Less; Interest
    Net Income
    Number of Shares Outstanding
    EPS
    a)
    Plan
    b)
    Plan
    c)
    Breakeven EBIT

    $1,500,000
    $1,500,000
    $0
    $1,500,000
    265,000
    $5.66

    Plan B
    (Levered
    Plan)
    185,000
    $2,800,000
    $280,000
    Plan B
    (Levered
    Plan)
    $750,000
    $280,000
    $470,000
    185,000
    $2.54
    Plan B
    (Levered
    Plan)
    $1,500,000
    $280,000
    $1,220,000
    185,000
    $6.59

    Plan A _x000D_(ALL Equity)


    Plan B _x000D_(Levered Plan)
    $927,500

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