David Baseball Company currently has $ 3 Min in debt outstanding, bearing an interest rate of 12%. It wishes to finance a $ 4 Mln expansion program and is considering three alternatives: Option 1: Additional debt at 14% interest, Option 2: preferred stock with 12% dividend, Option 3: sale of common stock at $ 16 per share. The company currently has 800,000 shares of common stock outstanding and is in a 40% tax bracket. a. If EBIT are currently at $ 1.5 Mln, what would be EPS for the three alternatives, assuming no immediate increase in operating profit? b. Determine mathematically the indifference point between the debt plan and the common stock plan