Foundation, Inc., is comparing two different capital structures: an all$-$equity plan $($Plan I$)$ and a levered plan $($Plan II$).$ Under Plan I, the company would have $145,000$ shares of stock outstanding. Under Plan II$,$ there would be $125,000$ shares of stock outstanding and $$716,000$ in debt outstanding. The interest rate on the debt is $8$ percent, and there are no taxes.

a$.$ If EBIT is $$300,000,$ which plan will result in the higher EPS?

b$.$ If EBIT is $$600,000,$ which plan will result in the higher EPS?

c$.$ What is the break$-$even EBIT?

Input Area:

Plan I:

Shares outstanding

$145,000$

$8$ Plan II:

$9$ Shares outstanding

$125,000$

Debt outstanding

$$716,000$

Interest rate

$8\%$

EBIT

$$300,000$

EBIT

$$600,000$