You are looking at two alternate capital structures: I is all equity and II is a levered plan. I II Debt $0 $3 million Interest Rate 0 10% Shares...

You are looking at two alternate capital structures: I is all equity and II is a levered plan.

III

Debt$0$3 million

Interest Rate010%

Shares outstanding240000160000

Assume a tax rate of 20%.

a.IF EBIT is $ 300,000; compute EPS for both plans.

b.IF EBIT is $ 600,000 compute EPS for both plans.

c.Compute the EBIT break-even point.