ABC Inc is considering a recapitalization plan that would convert the company from its all equity capital structure to one including some financial leverage. It now has 100,000,000 shares of common stock outstanding, which are selling for $40 each. You expect the EBIT to be $50,000,000 per year for the foreseeable future.

We will issue $100,000,000 worth of debt with an interest rate of 6.5% and use the proceeds to repurchase shares of stock at a price of $40 each.

Please calculate the number of shares outstanding, price per shares, and the debt to equity ratio of the company should it proceed with the recapitalization .

calculate the minimum level of EBIT where EPS for stockholders are the same under the current and proposed recapitalization