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 750,000 shares of stock outstanding. Under Plan II, there would be 500,000 shares of stock outstanding and $8.50 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.

Requirement 1:

Assume that EBIT is $2.3 million. Compute the EPS for both Plan I and Plan II

Requirement 2:

Assume that EBIT is $2.8 million. Compute the EPS for both Plan I and Plan II.

Requirement 3:

What is the break-even EBIT?