Suppose that after the COVID 19 pandemic is greatly contained and that 'life gets back to normal' as before, OKR Ltd is deciding to use two different capital structures to expand the business. While comparing both the capital structures: In Plan I an all-equity capital structure, OKR Ltd will have 0.6 million shares outstanding while 300,000 shares would be outstanding in Plan II. Plan II is a levered plan and this would have $10,000,000.00 worth of outstanding debt. The tax rate would be 30.00% while interest rate on debt will be 10.00%.

(i) What would be the break-even EBIT for OKR Ltd?(3 marks)

(ii) Assuming yourself as a business director/finance manager for OKR Ltd, provide a disadvantage of using Plan II post COVID 19.(2 marks)

(iii) State and explain any two scenarios whereby a firm can take tax benefits by issuing debt securities.