Under Plan A, the debt-to-total-assets ratio will be maintained, but new debt will cost a whopping 16 percent! Under Plan B, only new common stock at $10 per share will be issued. The tax rate is 30 percent.

1. If EBIT is 14 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.

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

Note: Round your answers to 2 decimal places.

1. If stock could be sold at $20 per share due to increased expectations for the firms sales and earnings, compute earnings per share for each alternative.

Note: Round your answers to 2 decimal places.