Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 725,000 shares of stock outstanding. Under Plan II, there would be 475,000 shares of stock outstanding and $7.25 million in debt outstanding. The interest rate on the debt is 11 percent, and there are no taxes.

1. Assume EBIT is 1.8 million. compute the EPS for both Plan I and Plan II.

2. Assume EBIT is 3.3 million. Compute EPS for both plan I and plan II.

3. What is the break-even EBIT?