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Reliable Gearing currently is all - equity - financed. It has 1 6 , 0 0 0 shares of equity outstanding, selling at $ 1

Reliable Gearing currently is all-equity-financed. It has 16,000 shares of equity outstanding, selling at $100 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $260,000 with the proceeds used to buy back stock. The high-debt plan would exchange $460,000 of debt for equity. The debt will pay an interest rate of 10%. The firm pays no taxes.
What will be the debt-to-equity ratio if it borrows $260,000?
Note: Round your answer to 2 decimal places.
If earnings before interest and tax (EBIT) are $170,000, what will be earnings per share (EPS) if Reliable borrows $260,000?
Note: Round your answer to 2 decimal places.
If earnings before interest and tax (EBIT) are $170,000, what will be earnings per share (EPS) if Reliable borrows $460,000?
Note: Round your answer to 2 decimal places.

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