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b) The EBIT-EPS Analysis. Parker Brothers, Inc., is considering three financing plans. The key information is as follows: (Assume a 50 percent tax rate). Plan

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b) The EBIT-EPS Analysis. Parker Brothers, Inc., is considering three financing plans. The key information is as follows: (Assume a 50 percent tax rate). Plan A Plan B Plan C Common stock: $200,000 Bonds at 8%: $100,000 Preferred stock at 8%: $100,000 Common stock: $100,000 Common stock: $100,000 In each case the common stock will be sold at $20 per share. The expected EBIT is $80,000. Determine (a) the EPS for each plan, and (b) the financial break-even point for each plan. (c) Draw the EBIT-EPS graph. (d) Indicate over what EBIT range each plan is preferred

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