Stoner Corporation is considering two financing alternatives. Under the first alternative, interest expense would be $60,000 and there would be 20,000 common shares outstanding. Under the second alternative, interest costs would be $85,000 and there would be 15,000 common shares outstanding. Stoner has EBIT of $250,000 and pays income taxes at a 21% rate.

If Stoners EBIT went up by 15% to $287,500, which financing alternative would produce the greater EPS?

	A.	The first alternative ($60,000 interest; 20,000 shares)
	B.	It is impossible to tell.
	C.	They would both produce the same EPS.
	D.	The second alternative ($85,000 interest; 15,000 shares)