The Springfield Trucking Corporation (STC) has decided in favor of a capital restructuring.

Currently, STC has no debt. Following the restructuring, however, the debt will be $1,000,000. The

interest rate on the debt will be 9%. STC currently has 200,000 shares outstanding with a price/share

of $20. The $1,000,000 of new debt will be used to buy back company stock. If the restructuring is

expected to increase EPS (earnings/share), what is the minimum level of EBIT that STCs

management must be expecting? For simplicity, ignore taxes in answering.

a. $90,000

b. $200,000

c. $360,000

d. $1,250,000

e. Cannot determine with the information provided.