OKR Ltd is deciding to use two different capital structures to expand the business. While comparing both the capital structures: In Plan I an all-equity capital structure, OKR Ltd will have 0.6 million shares outstanding while 300,000 shares would be outstanding in Plan II. Plan II is a levered plan and this would have $10,000,000.00 worth of outstanding debt. The tax rate would be 30.00% while interest rate on debt will be 10.00%.

(i) What would be the break-even EBIT for OKR Ltd? (3 marks)

(ii) Assuming yourself as a business director/finance manager for OKR Ltd, provide a disadvantage of using Plan II post COVID 19. (2 marks)

(iii) State and explain any two scenarios whereby a firm can take tax benefits by issuing debt securities.