Question 6 [ Capital Structure Policies] a. What are the determinants of capital structure of a company? b. Management of Total S.E. Inc. is considering two alternative financing plans. The detailed information is given in the table below. Plan A Plan B Amount in $'000 Common stock Preferred stock Borrowings 10000 4000 6000 6000 2000 12000 The par value of common stock is $10, preferred stock has $100 par value and 6% dividend, and long-term debt is presented by 10-year bonds of $1,000 par value and a fixed annual coupon rate of 8%. The corporate income tax rate is 30%. If the company expects to earn EBIT of 3000 ( amount in $000), which of two plans will produce better EPS and thus higher shareholders' value