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.

a$.$ Complete the following table given earnings before interest and taxes of $$34,000,$$$72,000,$ and $$89,000.$ Assume the tax rate is $10$

percent.

Note: Negative amounts should be indicated by parentheses or a minus sign. Round your answers to $2$ decimal places. Leave no

cells blank be certain to enter $0$ wherever required.

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?

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$)$

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?