+ Use the following to answer questions 10-11: Current capital structure Assets $15,000,000 Debt $0 Equity $15,000,000 Share price $25 Shares outstanding 600,000 Bond coupon rate Proposed capital structure $15,000,000 $6,000,000 $9,000,000 $22.5 400,000 8% There are no taxes. EBIT is expected to be $2.5 million, but could be as high as $3.5 million if an economic expansion occurs, or as low as $2 million if a recession occurs. All values are market values. 10- What is EPS under the current capital structure if there is a recession? A) $3.33 B) $4.17 C) $5.00 D) $6.25 E) $7.15 11- What is the break-even EBIT for these two capital structures? A) $720,000 B) $1,250,000 C) $1,440,000 D) $2,000,000 E) $2,500,000