Suppose a firm currently has no debt. It has 13,500 shares outstanding and the price per share is $42. The firm is considering to change into a proposed new capital structure with 30% of debt, using borrowed money to repurchase some stock , and the cost of debt is 7%. Assume we are in a perfect capital world with no corporate tax . Firm maintain 100 percent dividend payout policy. The firm expects to generate a EBIT of $56,000 a year forever. .

What is EPS under current capital structure? ( Format and round to two decimals, for example: 1.20 )

Under new proposed capital structure, how many shares of stocks will be repurchased using borrowed money? ( Format and round to whole number, NO decimals, for example: 1234 )

. What is EPS under proposed new capital structure? ( Format and round to two decimals, for example: 1.20 ) .

Find out Break-even EBIT, that is, the EBIT that makes EPS under current and proposed capital structure equal.