Can someone help me to answer question 2? Thank-you

1. Tutorial 10 Capital Structure An unlevered rm is considering going into debt. The rm currently has 280,000 shares outstanding valued at $25 each. The rm is planning to borrow $2 million and use the capital to repurchase equity. The debt has an interest rate of 5% p.a. and the company tax rate is 30%. (a) How many shares will be outstanding if the proposal proceeds? [b] Should the rm proceed with the proposal if EBIT is predicted to be $350,000? (c) What is the breakeven EBIT level? Cross City Tunnel (CCT) Ltd currently has 5 million shares on issue each with a market price of $2.50. CCT also has 53 million of debt. The Chief Financial Offer is considering changing the capital structure by issuing $4 million of debt and using the entire proceeds to conduct a share buyback. The interest rate on debt is 10% p.a. and the company tax rate is 30%. (3) Calculate EPS for both the Current and the proposed capital structures at a projected EBIT level of $3.7 million. Which capital structure is preferable if this is the expected level of EBIT? (b) At what level of EBIT is CCT indifferent between the two capital structures under consideration? (c) Graph the current and proposed capital structures