Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. Lenow Debt @ 8% Common stock, $10 par Total Common shares Hall $120,00 Debt @ 8% 240, eee Common stock, $10 par $360,00 Total 24,608 Common shares $240,000 120,000 $360,000 12,080 a. Complete the following table given earnings before interest and taxes of $16.000. $28.800 and $57.000. Assume the tax rate is 10 percent. (Negative amounts should be Indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between the EPS of the two firms? EBIT/TA % Lenow EPS Hall EPS S S S EBIT 16,000 28,800 57,000 Total Assets S 360,000 S 360,000 S 360,000 96 % b-1. What is the EBIT/TA rate when the firm's have equal EPS? EBIT/TA rate 96 b-2. What is the cost of debt? Cost of debt 96 b-3. State the relationship between earnings per share and the level of EBIT. EPS is unaffected by financial leverage when the pre-tax return on assets (EBIT/TA) the cost of debt c. If the cost of debt went up to 10 percent and all other factors remained equal, what would be the break-even level for EBIT? Break-even level