Assuming two steuctures. 40% tax rate.

Complete using $50,000 and $60,000 EBIT

Source of capital Long-term debt Common stock Structure A $95,000 at 15.1% coupon rate 4,700 shares Structure B $190,000 at 16.1% coupon rate 2,350 shares a. Calculate two EBIT-EPS coordinates for each of the structures by selecting any two EBIT values and finding their associated EPS values. b. Plot the two capital structures on a set of EBIT-EPS axes. C. Indicate over what EBIT range, if any, each structure is preferred. d. Discuss the leverage and risk aspects of each structure e. If the firm is fairly certain that its EBIT will exceed $75,000, which structure would you recommend? Why