Problem $2-22$ Income Statement $($LG$2-1)$

Consider a firm with an EBITDA of $$1,100,000$ and an EBIT of $$1,000,000.$ The firm finances its assets with $$4,650,000$ debt $($costing $7\mathrm{.}6$

percent, all of which is tax deductible$)$ and $216,000$ shares of stock selling at $$18$ per share. To reduce risk associated with this financial

leverage, the firm is considering reducing its debt by $$2,700,000$ by selling additional shares of stock. The firm's tax rate is $21$ percent.

The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $$1,000,000.$

Calculate the EPS before and after the change in capital structure and indicate changes in EPS.

Note: Do not round intermediate calculations. Round your answers to $2$ decimal places.