Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding and $1.8 million in debt outstanding. The interest rate on the debt is 6 percent, and there are no taxes.

a. If EBIT is $225,000, what is the EPS for each plan?

b. If EBIT is $475,000, what is the EPS for each plan?

c. What is the break-even EBIT?