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An all - equity firm has 3 million shares outstanding and is considering borrowing $ 5 million at an annual rate of 7 % and

An all-equity firm has 3 million shares outstanding and is considering borrowing $5 million at an annual rate of 7% and using the proceeds to buy back one-fourth of its outstanding shares. What is the Break-Even EBIT? What is the EPS for each capital structure (unlevered and levered) at the Break-Even EBIT? What is the EPS for each capital structure at an EBIT of $1.8 million? What is the EPS for each capital structure at an EBIT of $800,000?

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