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Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. Lenow Debt @ 10% Common stock, $10 par Total Common shares Hall $230,000 Debt @ 10% 460,000 Common stock, $10 par $690,000 Total 46,000 Common shares $460,000 230,000 $690,000 23,000 a. Complete the following table given earnings before interest and taxes of $27,000, $69,000, and $71,000. Assume the tax rate is 30 percent. (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between the EPS of the two firms? EBIT Total Assets EBIT/TA % Lenow EPS Hall EPS $ $ 27,000 $ 69,000 $ 71,000 $ 690,000 690,000 690,000 % b-1. What is the EBIT/TA rate when the firm's have equal EPS? EBIT/TA rate % b-2. What is the cost of debt? Cost of debt % b-3. State the relationship between earnings per share and the level of EBIT. EPS is unaffected by financial leverage when the pre-tax return on assets (EBIT/TA) the cost of debt. c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the break-even level for EBIT? Break-even level