ABC Company has a total asset of 400,000 of which 30% is debt with 12% interest and 70% is equity. This is the current capital structure and Moses earns EBIT of $40,000. However, ABC planned to get involved in investment of $ 100,000 that would increase his current income from $. 40,000 to $. 60,000. To mobilize $ 100,000 required for invest assume the following two options are available A. Issuing shares of 1000 each at $100 B. Selling bond costing $ 100,000 that bears interest rate of 12.5% Given the above data and assuming that there is no preferred stock in capital structure I. Determine optimal capital structure II. Calculate degree of financial leverage taken into account 50% tax rate III. Calculate EBIT and EPS at breakeven point IV. Decide whether pan A or plan B is better