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Alexander Enterprises Inc, is an unlevered firm currently earning an EBIT of $10 million, with 3 million shares of common stock outstanding and a tax

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Alexander Enterprises Inc, is an unlevered firm currently earning an EBIT of $10 million, with 3 million shares of common stock outstanding and a tax rate of 40%. In anticipation of making a major acquisition, Alexander is evaluating whether to finance its future growth using the sale of $20 million of new 10% bonds (Plan 1) or the issuance of 2 million new shares of common stock at $10 per share (Plan 2). The firm's EBIT-EPS indifference point corresponds to an EBIT of $ and an EPS of $ Earlier today, Alexander's CFO and her staff developed two postacquisition forecasts of the firm's expected EBIT. If the economy and the acquisition are expected to perform poorly, Alexander's EBIT is expected to be $3 million, but the economy and the acquisition are expected to perform well, the EBIT is expected to be $15 million. One of the staff members used these EBIT data and the corresponding EPS values to generate the following EBIT-EPS graph. Examine the graph and use it to answer the questions that follow. Alexander Enterprises Inc, is an unlevered firm currently earning an EBIT of $10 million, with 3 million shares of common stock outstanding and a tax rate of 40%. In anticipation of making a major acquisition, Alexander is evaluating whether to finance its future growth using the sale of $20 million of new 10% bonds (Plan 1) or the issuance of 2 million new shares of common stock at $10 per share (Plan 2). The firm's EBIT-EPS indifference point corresponds to an EBIT of $ and an EPS of $ Earlier today, Alexander's CFO and her staff developed two postacquisition forecasts of the firm's expected EBIT. If the economy and the acquisition are expected to perform poorly, Alexander's EBIT is expected to be $3 million, but the economy and the acquisition are expected to perform well, the EBIT is expected to be $15 million. One of the staff members used these EBIT data and the corresponding EPS values to generate the following EBIT-EPS graph. Examine the graph and use it to answer the questions that follow

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