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. Debt @ 9% Lenow Common stock, $10 par Total Common shares Hall $130,000 Debt @ 9% $260,000 260,000 Common stock, $10 par $390,000 Total 130,000 26,000 Common shares $390,000 13,000 a. Complete the following table given earnings before interest and taxes of $17,000, $35,100, and $58,000. 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.) Answer is complete and correct. What is the relationship between EBIT Total Assets Lenow EBIT/TA % EPS Hall EPS the EPS of the two firms? $ 17,000 $ 390,000 4.36 % $ 0.16 $ (0.39) Lenow EPS > Hall EPS $ 35,100 $ 390,000 $ 58,000 $ 390,000 9.00 % $ 0.72 $ 0.72 Lenow EPS = Hall EPS 14.87 % $ 1.42 $ 2.13 Lenow EPS Hall EPS 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 % 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