(a) The Red Corporation 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 375,000 shares of stock outstanding. Under Plan II, there would be 225,000 shares of stock outstanding and $6 million in debt outstanding. The interest rate on the debt is 11 percent, and there are no taxes. a. If EBIT is $3,800,000, which plan will result in the higher EPS? (3 marks ) b. If EBIT is $6.700,000, which plan will result in the higher EPS? (3 marks) c. What is the break-even EBIT? (4 marks) a) Trump Inc. has decided in favor of a capital structuring that involves increasing its existing $60 million in debt to $105 million. The interest rate on debt is 7% and is not expected to change. The firm currently has eight ( 8 ) million shares outstanding and the price per share is $30. If the restructuring is expected to, increase the ROE, what is the minimum level of EBIT that Trump's management must be expecting. Ignore taxes in your answer. (6 marks) b) Big Wig Corporation operating out of Toco in Trinidad, is seeking to determine its cost of equity. Big Wig has an unlevered cost of capital of 12 percent, a tax rate of 20 percent, and an expected EBIT of $1,500,000. Big Wig has $350,000 of Bond debt outstanding that pays a 7 percent coupon interest annually, which is currently selling at par value. What is the cost of equity? (7 marks)