Tower Interiors has made the forecast of sales shown in the following table. Sales $230,000 $320,000 $420,000 The firm has fixed operating costs of $76,500 and variable operating costs equal to 65% of the sales Probability 0.35 0.50 0.15 level. The company pays $13,800 n interest per period. The tax rate is 40%. a. Compute the earnings before interest and taxes (EBIT) for each level of sales. Probability Sales Less: Variable costs (65%) Less: Fixed costs EBIT 0.35 0.45 0.20 S230,000 320,000 S 420,000 b. Compute the earnings per share (EPS) for each level of sales, the expected EPS, the standard deviation of the EPS, and the coefficient of variation of EPS, assuming that there are 10,700 shares of common stock outstanding Probability EBIT Less: Interest 0.35 0.45 0.20 Earnings before taxes Less: Taxes Earnings after taxes EPS c. Tower has the opportunity to reduce its leverage to zero and pay no interest. This will require that the number of shares outstanding be increased to 16,050. Repeat part (b) under this assumption. Probability 0.35 0.45 0.20 EBIT Less: Interest Earnings before taxes Less: Taxes Earnings after taxes EPS d. Compare your findings in parts (b) and (c), and comment on the effect of the reduction of debt to zero on the firm's financial risk Summary Statistics Expected EPS Standard deviation of EPS Coefficient of Variation of EPS With Debt All Equity