DAR Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.3 million in debt outstanding. The interest rate on the debt is 6 percent, and there are no taxes.

1) If EBIT is $200,000, what is the EPS for each plan?

EPS

Plan I $ ________

Plan II $ ________

2) If EBIT is $450,000, what is the EPS for each plan?

EPS

Plan I $ _______

Plan II $ _______

3) What is the break-even EBIT?

break-even EBIT $ _________