The Lopez$-$Portillo Company has $$12\mathrm{.}1$ million in assets, $90$ percent financed by debt and $10$ percent financed by common stock. The

interest rate on the debt is $11$ percent and the par value of the stock is $$10$ per share. President Lopez$-$Portillo is considering two

financing plans for an expansion to $$25\mathrm{.}5$ million in assets.

Under Plan A$,$ the debt$-$to$-$total$-$assets ratio will be maintained, but new debt will cost a whopping $13$ percent! Under Plan B$,$ only new

common stock at $$10$ per share will be issued. The tax rate is $40$ percent.

a$.$ If EBIT is $12$ percent on total assets, compute earnings per share $($EPS$)$ before the expansion and under the two alternatives.

Note: Round your answers to $2$ decimal places.

b$.$ What is the degree of financial leverage under each of the three plans?

Note: Round your answers to $2$ decimal places.

c$.$ If stock could be sold at $$20$ per share due to increased expectations for the firm's sales and earnings, compute earnings per share

for each alternative.

Note: Round your answers to $2$ decimal places.