CASE 3 (20 points) A company is comparing three different capital structures: Plan I would result in 15,000 shares of stock outstanding (all-equity plan)

CASE 3 (20 points) A company is comparing three different capital structures: Plan I would result in 15,000 shares of stock outstanding (all-equity plan). Plan II would result in 12,000 shares of stock and €100,000 in debt. Plan II would result in 8,000 shares of stock and €200,000 in debt. The interest rate on the debt is 10 percent. A company expects to earn EBIT C95,000. ignore taxes. Instructions: 1. Calculate EPS for each plan. (15 points) 2. Which plan do you recommend to the company? Explain the effect of financial leverage (5 points) CASE 4 (20 points) The stockholders' equity accounts for a corporation are shown here: Common stock (63 par value) €90,000 Capital surplus 300,000 Retained earnings 510,000 Total stockholders' equity 900,000 Instructions: 1. If the company's stock currently sells for 634 per share and a 15 percent stock dividend is declared, how many new shares will be distributed? Show how the equity accounts would change. (10 points) 2. If the company declares a three-for-two stock split, how the equity accounts will change? How many shares are outstanding now? What is the new par value per share? (10 points)