QUESTION 3 (20 MARKS) Purple Jewel Company is looking into a method to secure additional capital for their next project investment. They were given three options: either to pursue 100% debt, 100% stock or to pursue an alternative with ratio of 50% Debt : 50% stock combo. By conducting EPS/EBIT Analysis for the Purple Jewel Company, which option will you as an advisor encourage them to pursue? Justify your answer. Show your EPS/EBIT analysis calculation based on the information (Input data) provided as below.

No Input Data Details 1 $ Amount of capital needed $100 million 2 EBIT Range $40 to 60 million 3 Interest rate 5 percent 4 Tax rate 30% 5 Stock Price $50 6 Number of Shares Outstanding 500 million

(20 marks)