Problem 16-15 Earnings and Leverage (L01) Reliable Gearing currently is all-equity-financed. It has 10,000 shares of equity outstanding, selling at $50 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $150,000 with the proceeds used to buy back stock. The high-debt plan would exchange $270,000 of debt for equity. The debt will pay an interest rate of 10%. The firm pays no taxes. a. What will be the debt-to-equity ratio after each possible restructuring? (Round your answers to 2 decimal places.) DIE (low) D/E (high) b1. If earnings before interest and tax (EBIT) will be either $30,000 or $75,000, what will earnings per share be for each financing mix for both possible values of EBIT? (Round your answers to the nearest cent.) EPS ($30,000: low-debt plan) EPS ($75,000, low-debt plan) EPS ($30,000, high-debt plan) EPS (575,000 high-debt plan) 62. If both scenarios are equally likely, what is expected (that is, average) EPS under each financing mix? (Round your answers to the nearest cent.) Expected EPS (low-debt plan) Expected EPS (high-debt plan) b3. Is the high-debt mix preferable? c. Suppose that EBIT is $50,000. What is EPS under each financing mix? (Round your answers to the nearest cent.) EPS (low-debt plan) EPS (high-debt plan)