Integrative Optimal capital structure Medallion Cooling Systems, has total assets of $10,800,000, EBIT of $2,000,000, and preferred dividends of $203,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment: Cost of debt, rd 0% Number of common stock shares 196,000 Required return, r 12.3% 7777 Capital structure debt ratio 0% 15 30 45 60 8.1 9.2 12.2 14.7 a. Calculate earnings per share for each level of indebtedness. 175,000 141,000 106,000 80,000 13.1 14.3 16.2 19.9 b. Use the equation Po-EPS/r, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness. a. Calculate earnings per share for each level of indebtedness. Calculate the EPS below: (Round to the nearest dollar. Round the EPS to the nearest cent.) Debt Ratio 0% EBIT $ 2,000,000 Less: Interest $ EBT $ Taxes @40% $ Net profit $ Less: Preferred dividends $ Profits available to common stockholders $ #shares outstanding $ 196,000