Contrail Air, Inc., is looking at two capital structures.

• Plan A is an all equity with 500,000 shares outstanding
• Plan B is a levered plan with 320,000 shares outstanding and debt of $3,467,000 outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

1. If EBIT is $500,000, which plan will result in the higher EPS?
2. If EBIT is $800,000, which plan will result in the higher EPS?
3. What is the break-even EBIT?

I also would like the steps taken to come to the answer so I can understand the process