Transcribed Image Text
DAR Corporation is comparing two different capital structures:an all-equity plan (Plan I) and a levered plan (Plan II). UnderPlan I, the company would have 190,000 shares of stock outstanding.Under Plan II, there would be 140,000 shares of stock outstandingand $2.8 million in debt outstanding. The interest rate on the debtis 6 percent, and there are no taxes. a.If EBIT is $275,000, what is the EPS for each plan? (Donot round intermediate calculations and round your answers to 2decimal places, e.g., 32.16.) EPS Plan I$ Plan II$ b.If EBIT is $525,000, what is the EPS for each plan? (Donot round intermediate calculations and round your answers to 2decimal places, e.g., 32.16.) EPS Plan I$ Plan II$ c.What is the break-even EBIT? (Do not round intermediatecalculations. Enter your answer in dollars, not millions ofdollars, e.g., 1,234,567.) Break-even EBIT$