a. Calculate the EPS for each level of indebtedness below: (Round to the nearest dollar. Round the EPS to the nearest cent.)

	0%	15%	30%	45%	60%
EBIT
Less: Interest
EBT
Taxes
Net Profit
Preferred Div.
EACS
# shares
EPS

b. Calculate a price per share for each level of indebtedness.

The price per share for the 0% level of indebtedness is $ .......... Fill in the blank, read surrounding text. . (Round to the nearest cent.)

The price per share for the 15% level of indebtedness is $ .......... Fill in the blank, read surrounding text. . (Round to the nearest cent.)

The price per share for the 30% level of indebtedness is $ Blank 48. Fill in the blank, read surrounding text. . (Round to the nearest cent.)

The price per share for the 45% level of indebtedness is $ ........... Fill in the blank, read surrounding text. . (Round to the nearest cent.)

The price per share for the 60% level of indebtedness is $ ............. Fill in the blank, read surrounding text. . (Round to the nearest cent.)

c. Choose the optimal capital structure.

The optimal capital structure would be .......... Fill in the blank, read surrounding text. % debt and ......... Fill in the blank, read surrounding text. % equity.

Medallion Cooling Systems, Inc., has total assets of $10,700,000, EBIT of $2,020,000, and preferred dividends of $205,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment: Capital structure Cost of debt, Number of common Required return, debt ratio rd stock shares f's 0% 0% 197,000 12.2% 15% 7.8% 170,000 12.8% 30% 8.9% 137.000 13.8% 45% 12.1% 108.000 15.8% 60% 15.1% 80,000 20.1% a. Calculate earnings per share for each level of indebtedness. b. Use the equation PO=EPS/rs and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness. C. Choose the optimal capital structure. Justify your choice