Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below.

Cain Able

Debt @ $8\%$ $$240,000$ Debt @ $8\%$ $$480,000$

Common stock $480,000$ Common stock $240,000$

Total $$720,000$ Total $$720,000$

Common shares $48,000$ Common shares $24,000$

a$.$ Compute EPS if EBIT are $$48,000,$ $$57,600,$ and $$69,000($assume a $10$ percent tax rate$).($Round the final answers to $2$ decimal places. Do not leave any empty spaces; input a $0$ wherever it is required.$)$

Cain Able

EPS at $$48,000$ $ $

EPS at $$57,600$ $ $

EPS at $$69,000$ $ $

b$.$ What is the relationship between EPS and level of EBIT?

$1.$ Earnings before interest and taxes is less than cost of debt.

$2.$ Earnings before interest and taxes equals cost of debt.

$3.$ Earnings before interest and taxes is greater than cost of debt.

c$.$ If the cost of debt went up to $10$ percent and all other factors remained equal, what would be the indifference point for EBIT?

Break$-$even level $