2.Your firm has earnings before interest \& tax (EBIT) of $4M, outstanding debt (D) of $2M, cost of debt (kd)=10%, cost of equity (ke)=15%, and number of shares outstanding (N0)=600,000. Book value per share =$10. The firm has a tax rate of 35%. The firm is in a stable market and expects no growth so pays out all earnings as dividends. A. What are the firm's earnings per share (EPS), and its share price (P0) ? B. What is its WACC? C. The firm can increase its debt by $8M to $10M and use the new debt to retire some shares at their current price. Interest on the debt will be 12%. It will have to retire the old debt. All debt is in the form of perpetual bonds. Cost of equity will rise from 15% to 17%. EBIT will be unchanged. Should the firm change its capital structure? D. What is the firm's original "times interest earned" or TIE? What is the new TIE