Pour girlfriend plans to start a new company to make a new type of cat litter. Her father will finance the operation, but she will have to pay him back. You are helping her, and the issue now is how to finance the company, with equity only or with a mix of debt and equity. The price per unit will be $10.00 regardless of how the firm is financed. The expected fixed and variable operating costs, along with other information, are shown below. How much higher or lower will he firm's expected EPS be if it uses some debt rather than only equity, i.e., what is EPS- EPSu? Do not round your intermediate calculations. 0% Debt, u 60%6 Debt, L Expected unit sales 270,000 270,000 Price per unit $10.00 $10.00 Fixed costs $1,000,000 $1,000,000 Variable cost/unit $3.50 $3.50 Required investment $2,500,000 $2,500,000 Shares issued at $10/share 250,000 100,000 96 Debt 0.00% 60.00% Debt, s $0 $1,500,000 Equity, $ $2,500,000 $1,000,000 Interest rate NA 10.0096 Tax rate 25.0096 25.0096 O a $2.27 O b. $1.87 O c. $1.97 O d. $1.58 e. $2.17 Icon Key