Consider two firms that are identical in every way except that one has $15,000 of debt and 500 shares of stock outstanding, while the other is all-equity and has 650 shares of stock outstanding. Assume that the debt is a perpetuity with annual coupons at the rate of 6%. What is each firms earnings per share if EBIT is $7,500? Assume a tax rate of 40%

	Leveraged Firm	All-Equity Firm
EBIT	$7,500	$7,500
EPS	?	?

a.EPS_L = 6.92; EPS_E = 7.92

b.EPS_L = 7.92; EPS_E = 7.92

c.EPS_L = 8.92; EPS_E = 6.92

d.EPS_L = 6.92; EPS_E = 6.92

e.EPS_L = 7.92; EPS_E = 6.92