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ACME Inc. is comparing two different capital structures: an all - equity plan and a levered plan. Under Plan I, the company would have 2

ACME Inc. is comparing two different capital structures: an all

-

equity plan and a levered plan. Under Plan I, the company would have

200, 000

shares of stock outstanding. Under Plan II

,

there would be

150, 000

shares of stock outstanding and $

1, 000, 000

in debt outstanding. The interest rate on the debt is

6 %

and there are no taxes.

If EBIT is $

500, 000,

what will be the highest EPS?

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