$($EBIT$-$EPS analysis$)$ Bill and Kate Theil are not only husband and wife but entrepreneurs who have established three successful businesses. The proposed plan for their latest effort involves a series of international retail outlets to distribute and service a full line of ingenious home garden tools. The stores would be located in$$ high$-$traffic cities in Latin America such as Panama$$ City, Bogot$,$ S$$o Paulo, and Buenos Aires. The entrepreneurs have proposed two financing plans. Plan A is an all$$ common$-$equity structure. Five million dollars would be raised by selling $160$ comma $000160,000$ shares of common stock. Plan B would involve the use of$$ long$-$term debt financing. Three million dollars would be raised by marketing bonds with an effective interest rate of $1414$ percent. Under plan$$ B$,$ another$$ $$2$ million would be raised by selling $64$ comma $00064,000$ shares of common stock. With both$$ plans, $$5$ million is needed to launch the new$$ firm's operations. The debt funds raised under plan B are considered to have no fixed maturity$$ date, because this portion of financial leverage is thought to be a permanent part of the$$ company's capital structure. The two promising entrepreneurs have decided to use a $3535$ percent tax rate in their$$ analysis, and they have hired you on a consulting basis to do the$$ following:

a$.$ Find the EBIT indifference level associated with the two financing proposals.

b$.$ Prepare income statements for the two plans that prove EPS will be the same regardless of the plan chosen at the EBIT level found in part $($a$).$