Part $1$ of $16$

Debt and financial risk Tower Interiors has made the forecast of sales shown in the following table. Also given is the probability of each level of sales.

$\backslash$table$[[$Sales$,$Probability$],[$$$220,000,0\mathrm{.}25],[320,000,0\mathrm{.}65],[420,000,0\mathrm{.}10]]$

The firm has fixed operating costs of $$75,200$ and variable operating costs equal to $60\%$ of the sales level. The company pays $$13,200$ in interest per period. The tax rate is $40\%.$

a$.$ Compute the earnings before interest and taxes $($EBIT$)$ for each level of sales.

b$.$ Compute the earnings per share $($EPS$)$ for each level of sales, the expected EPS, the standard deviation of the EPS, and the coefficient of variation of EPS, assuming that there are $11,900$ shares of common stock outstanding.

c$.$ Tower has the opportunity to reduce its leverage to zero and pay no interest. This will require that the number of shares outstanding be increased to $17,850.$ Repeat part

a$.$ Compute the earnings before interest and taxes $($EBIT$)$ for each level of sales.

Calculate the EBIT below: $($Round to the nearest dollar.$)$

$\backslash$table$[[$Probability$,],[$Sales$,$$$\mathrm{.}25$