The GCI Corporation is planning a $4,000,000 expansion this year. The expansion can be financed by issuing either common stock or bonds. The new common stock can be sold for $60 per share. The bonds can be issued with a 12 percent coupon rate. The firm's existing shares of preferred stock pay dividends of $2.00 per share. The company's corporate income tax rate is 46 percent. The company's balance sheet prior to expansion is as follows: GCI Corporation Current Assets $2,000,000 Fixed Assets 8,000,000 Total Assets $10,000,000 Current Liabilities $1,500,000 Bonds: (8%, $1,000 par value) 1,000,000 (10%, $1,000 par value) 4,000,000 Preferred Stock: ($100 par value) $500,000 Common Stock: ($2 par value) 700,000 Retained Earnings 2,300,000 Total Liabilities and Equity $10,000,000 a) Calculate the indifference level of EBIT between the two plans. b) If EBIT is expected to be $3 million, which plan will result in higher EPS?