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Jackson Inc. and Simon are two identical firms operating in identical markets. Jackson is unlevered with assets valued at $3,000 and has 175 shares of

Jackson Inc. and Simon are two identical firms operating in identical markets. Jackson is unlevered with assets valued at $3,000 and has 175 shares of stock outstanding. Simon also has $3,000 in assets and has $1,200 in debt financed at an interest rate of 5% and has 125 shares of stock outstanding. The corporate tax rate is 30%. Which of the following comes closest to the level of EBIT that would make earnings per share the same for Jackson and Simon?

a.

$275

b.

$310

c.

$290

d.

$240

e.

$210

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