Sewer's Parades is an all-equity firm that has 5,000 shares of stock outstanding at a total market value of $75,000 (Structure D). The firm's management has decided to issue 30,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 10 percent (Structure Il). Ignore taxes a. Given a net income of $10,000, calculate Earnings per Share (EPS) and Return on Equity (ROE) under structure 1 & 2.

b. What is the break-even level of EBIT? Interepret your answer.