Feel the Bern Corp. has the following operating results and capital structure ($000).

Revenue$6,000Debt$1,200

Cost/Expense4,500Equity8,800

EBIT$1,500Total$10,000

The firm is contemplating a capital restructuring to 60% debt. Its stock is currently selling for book value at $25 per share. The interest rate is 8%, and combined state and federal taxes are 43%.

(1) Calculate EPS under the current and proposed capital structures. Round the answers to two decimal places. Enter numbers only; do not include the "$".

Current$per share

Proposed$per share

(2) Calculate the DFL under both structures. Round the answers to two decimal places.

Current

Proposed

Use the DFLs to forecast the resulting EPS under each structure if operating profit falls off by -5%, -10%, or -25%. Round the answers to two decimal places. Do not round intermediate calculations. Enter numbers only; do not include the "$".

Forecast EPS%

EBIT Current Proposed

5%

10%

25%