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 Hall Debt @ 9% $280,000 Debt @ 9% $560,000 Common stock, $10 par Total $840,000 Total 560,000 Common stock, $10 par 280,000 Common shares 56,000 Common shares $840,000 28,000 a. Complete the following table given earnings before interest and taxes of $32,000, $75,600, and $82,000. Assume the tax rate is 20 percent. (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between EBIT Total Assets EBIT/TA % Lenow EPS $ 32,000 $ 840,000 3.81 % $ 0.10 $ Hall EPS the EPS of the two firms? (0.53) Lenow EPS > Hall EPS $ 75,600 $ 840,000 9.00 % $ 0.72 $ 0.72 Lenow EPS = Hall EPS $ 82,000 $ 840,000 9.76 % $ 0.81 $ 0.90 Lenow EPS es b-1. What is the EBIT/TA rate when the firm's have equal EPS? EBIT/TA rate b-2. What is the cost of debt? Cost of debt 4% 9 % 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 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 11 percent and all other factors remained equal, what would be the break-even level for EBIT? Break-even level