EXAMPLE2-WITH TAXES A firm has an expected perpetual EBIT-$4,000. The unlevered cost ofcapital-15% and there are 2,500 shares of stock outstanding at a market price of $20 a share. Management has decided to issue $10,000 worth of debt and use the funds to repurchase shares. The cost of debt is 8.5% and the tax rate 34%. What is the EPS of the firm before the restructuring? What is the EPS of the firm after the restructuring? What is the break-even level of EBIT? What are the earnings per share at the break-even level of EBIT? a. b. c. d