The Canterbury Coach Corporation has EBIT of $3.62 million, and total capital of $20 million, which is 15% debt. There are 425,000 shares of stock outstanding which sell at book value. The firm pays 12% interest on its debt and is subject to a combined state and federal tax rate of 40%. Canterbury is contemplating a capital restructuring to either 30%, 45%, 60%, or 75% debt. a. At the current level of profitability, will more debt enhance results? Why? In (5000) ROCE = EBIT (1-T)/Debt + Equity = After-tax cost of debt = b. Calculate the EAT, ROE, EPS, and the DFL at the current and proposed structures, and display your results in a systematic table. INCOME STATEMENT Current Proposals 15% 30% 45% 60% Debt Debt Debt Debt 75% Debt EBIT Interest EBT Tax EAT BALANCE SHEEET Debt Equity Capital Shares Book Value ROE EPS DFL = EBIT/EBIT-1) DFL (Ctrl)