The Ipsy Dipsy Preschools, Inc. has a current capital structure that consists of common equity, long$-$term debt

and preferred stock, see below for the detailed information:

market value of common equity $=35$ million, with $3\mathrm{.}5$ million shares outstanding;

total book value of long$-$term debt $=10$ million, with a coupon rate of $12$ percent;

total book value of preferred stock $=5$ million,

the par value per share of preferred stock $=$ $$50$ and the preferred dividend payout ratio $=10\%.$

The company is planning a major plant expansion and is undecided between the following two financing plans:

Equity financing: Sale of $500,000$ shares of common stock at $$10$ each.

Debt financing: Sale of $100,000$ shares of common stock at $$10$ each and $$4$ million of $12\mathrm{.}5$ percent long$-$term bonds.

Calculate the EBIT$-$EPS indifference point. Assume the marginal tax rate is $21\%.$