Hale corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 205,000 shares of stock outstanding. Under plan II, there would be 155,000 shares of stock outstanding and $2.3 million in debt outstanding. The interest rate on the debt is 6 percent and and there are no taxes.
a. If EBIT is $250,000, what is the EPS for EACH plan? (Do not round intermediate calculations and round answer to 2 decimal places)
b. If EBIT is $500,000, what is the EPS for EACH plan? (Do not round intermediate calculations and round answer to decimal places)
c. What is the break-even EBIT? (Do not round intermediate calculations)