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 @ 10% Common stock, $10 par Total Common shares Hall $170,000 Debtiek 340,000 Common stock, $10 par $518,000 Total 34,000 Common shares $340,000 170,000 $510,000 17,000 1. Complete the following table given earnings before interest and taxes of $21000, 551,000, and $62,000. Assume the tax rate is 30 percent (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) $ $ $ EBIT Total Assets 21,000 $ 510.000 51.000 $ 510,000 62.000 $ 510,000 What is the relationship between EBIT/TA % Lenow EPS Hall EPS the EPS of the two fimms? 4121% 0.82 s (7.65.now EPS > Hall EPS 10.00 $ 7.00 $ 7.00 Lenow EPS Hall EPS 12.16%s 9.26 $ 11.53 Lenow EPS Hall EPS S 7.00 $ 7.00 Lenow EPS = Hall EPS 9 26 S 11.53 X Lenow EPS Hall EPS GA IS 4.12% Total Assets 510,000 510.000 510.000 21000 51.000 62000 $ 10.00 % DOS 153 S 12.16 % $ b-1. What is the EBIT/TA rate when the firm's have equal EPS? Answer is complete and correct. EBIT/TA rate 10 % 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. Answer is complete and correct. EPS is unaffected by financial leverage when the pre-tax return on assets (EBIT/TA) equals the cast of debt c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the break-even level for EBIT? Break-even level Prey 16 of 19 Next >