Dickinson Company has $$12,200,000$ million in assets. Currently half of these assets are financed with long$-$term debt at $11\mathrm{.}0$ percent

and half with common stock having a par value of $$8.$ Ms$.$ Park, Vice President of Finance, wishes to analyze two refinancing plans,

one with more debt $($D$)$ and one with more equity $($E$).$ The company earns a return on assets before interest and taxes of $11\mathrm{.}0$ percent.

The tax rate is $40$ percent. Tax loss carryover provisions apply, so negative tax amounts are permissable.

Under Plan D$,$ a $$3,050,000$ million long$-$term bond would be sold at an interest rate of $13\mathrm{.}0$ percent and $381,250$ shares of stock

would be purchased in the market at $$8$ per share and retired.

Under Plan E$,381,250$ shares of stock would be sold at $$8$ per share and the $$3,050,000$ in proceeds would be used to reduce long$-$

term debt.

a$.$ Compute earnings per share considering the current plan and the two new plans.

Note: Round your answers to $2$ decimal places.

b$-1.$ Compute the earnings per share if return on assets fell to $5\mathrm{.}50$ percent.

Note: Negative amounts should be indicated by a minus sign. Round your answers to $2$ decimal places. Leave no cells blank be

certain to enter $0$ wherever required.

b$-2.$ Which plan would be most favorable if return on assets fell to $5\mathrm{.}50$ percent? Consider the current plan and the two new plans.