Northwestern Savings and Loan has a current capital structure consisting of $230,000 of18% (annual interest) debt and 1,000 shares of common stock. The firm pays taxes at the rate of 35%.

a. Using EBIT values of $78,000 and $124,000, determine the associated earnings per share (EPS).

b. Using $78,000 of EBIT as a base, calculate the degree of financial leverage (DFL).

c. Rework parts a and b assuming that the firm has $103,000 of 18% (annual interest) debt and 2,000 shares of common stock.

a. Calculate the EPS for EBIT value of $78,000 below: (Round to the nearest dollar except for the EPS which should be rounded to the nearest cent.)

EBIT	$
Less: Interest
Net profits before taxes	$
Less: Taxes (35%)
Net profit after taxes	$
EPS (1,000 shares)	$