1. Round Hammer 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 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding and $1.925 million in debt outstanding. The interest rate on the debt is 8%, and there are no taxes.a. If EBIT is $400,000, which plan will result in the higher EPS?b. If EBIT is $600,000, which plan will result in the higher EPS?c. What is the break-even EBIT?

2. In Problem 1, use M & M Proposition I to find the price per share of equity under each of the two proposed plans. What is the value of the firm? I only need Question number 2