After yesterday prime s board meeting, Agri Limited agreed to change its capital structure. The current capital structure of Agri is based on the view that low or no debt is better than high levels of debt. Agri Limited currently has a $200, 000 long-term bank loan paying 9% interest. It also has 80, 000 ordinary shares on issue under the current structure. The proposed capital structure will double the amount of the current bank loan, but Agri will need to pay 10% interest. With this change, the number of ordinary shares on issue would reduce to 40, 000 shares. Agri operates in the agricultural industry and the proposed capital structure is based on the industry averages. Assuming Agri pays 30% tax on its income, calculate the following: Assuming the firm expects EBIT of 3100, 000, what are the EPS for the current and proposed capital structures? Explain whether or not the board has made the right decision and justify your answer. Calculate the EBIT/EPS indifference point for EBIT. Indicate over which range of EBIT each capital structure is preferred. State two shortcomings of EBIT/EPS analysis