The Rapid Growth Company is evaluating a new project for this year. To fund the project, the following are the proposed financing plans: Plan A. This plan is an all equity plan. Under this plan, 100,000 common shares will be sold to net the company $40 per share. Plan B This plan calls for a debt issue of 30-year maturity bonds in addition to new equity issued at $40 per share. The debt issue will be for $2,000,000 and carry an 8 percent interest rate. The company tax rate is 40%and the company has 100,000 common shares issued and outstanding and the existing debt of $3,000,000 has a 6 percent coupon rate.

A. The EPS for the levered plan will alsways be higher than the un-levered plan.

B.There is no impact on the breakeven EBIT based upon the financing pla..

C. The EPIT/EPS indifference EBIT is $820,000.

D. The use of debt will dilute the EPS of the firm.

E. The EPIT/EPS indifference EBIT is $320,000.