I specifically need help with question A.		Lenow	Hall
	Debt	$100,000	$200,000
	Interest rate on debt %	.10	.10	Input as a decimal
	Common stock	$200,000	$100,000
	Par value per share of common	$10	$10
	Number of shares	20,000	10,000
	Total assets	$300,000	$300,000
	EBIT - 1	$20,000
	EBIT - 2	$30,000
	EBIT -3	$120,000
	Tax rate %	.30	Input as a decimal
	c. Cost of debt % increase	.12	Input as a decimal
	Enter answers in the highlighted areas below.
	Solutions:
a.	Complete the following table given earnings before interest and taxes of
	$20,000, $30,000, and $120,000. Assume the tax rate is 30 percent. (Leave
	no cells blank - be certain to enter "0" wherever required.
	Round your answers to 2 decimal places.)
	EBIT/Total Assets for the various levels of EBIT are:
	$20,000	$300,000	=
	$30,000	$300,000	=
	$120,000	$300,000	=

Problem 5-16 "Lenows Drug Stores and Halls Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented next. Lenow Hall Debt @ 10% $ 100,000 Debt @ 10% $ 200,000 Common stock, $10 par 200,000 Common stock, $10 par 100,000 Total $ 300,000 Total $ 300,000 Common shares 20,000 Common shares 10,000 a. Complete the following table given earnings before interest and taxes of $20,000, $30,000, and $120,000. Assume the tax rate is 30 percent. (Leave no cells blank - be certain to enter ""0"" wherever required. Round your answers to 2 decimal places.) b. State the relationship between earnings per share and the level of EBIT. c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the break-even level for EBIT?" Lenow Hall Debt $100,000 $200,000 Interest rate on debt % .10 .10 Input as a decimal Common stock $200,000 $100,000 Par value per share of common $10 $10 Number of shares 20,000 10,000 Total assets $300,000 $300,000 EBIT - 1 $20,000 EBIT - 2 $30,000 EBIT -3 $120,000 Tax rate % .30 Input as a decimal c. Cost of debt % increase .12 Input as a decimal Enter answers in the highlighted areas below. Solutions: a. Complete the following table given earnings before interest and taxes of $20,000, $30,000, and $120,000. Assume the tax rate is 30 percent. (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places.) EBIT/Total Assets for the various levels of EBIT are: $20,000 $300,000 $30,000 $300,000 $120,000 $300,000 Lenow Hall EBIT $20,000 $20,000 EPS EBIT $30,000 $30,000 EPS EBIT $120,000 $120,000 EPS b. State the relationship between earnings per share and the level of EBIT. c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the break-even level for EBIT? At the EBIT break-even level: EBIT / TA = Cost of debt EBIT = Cost of debt TA = .xx $xxx,xxx = $xx,xxx