Wingler Communications Corporation (WCC) produces aipoods that sell for $28.70 per set, and this yoar's sales are expected to be 450,000 units. Variable preduction fosts for the expected sales under present production methods are estimated at $10,300,000, and fixed production (operating) costs at present are $1,560,000. wCC has $4,800,000 of dee 2 outstand ing at an interest rate of 9%. There are 240,000 shares of common stock outstanding, and there is no preferred stock. The dividend payout ratio is 70%, and weC is in the 25% ferleral-plus.state tax bracket. WCC is a small company with average sales of $25 milion or less during the past 3 years, so it is exempt from the interest deduction imitation. The company is considering investing $7,200,000 in new equipment. Sales would not increase, but variable costs per unit would decline by 20%. Also, fixed operating costs weuld increase from $1,560,000 to $1,800,000, wCC could ralse the required capital by borrowing $7,200,000 at 100% or by selling 240,000 additional shares of common stock at $35 per stare. a. What would be wCC's EPS (1) under the old production process, (2) under the new process if it uses debt, and (3) under the new process if it uses common stock? Doo not raund intermediate calculations. Round your answers to the nearest cent. 1. 5 2. 5 3. 5 b. At what unit sales level would wCC have the same EPS number. c. At what unit sales level would EPS = 0 under the three production/financing setups - that is, under the old plan, the new plan with debt financing, and the new plan with stock financing? (Hint: Note that Vold =$10,300,000/450,000, and use the hints for part b, setting the EPS equation equal to zero.) Do not round intermediate calculations, Round your answers te the nearest whole number: Old plan: units New pian with debt financing: units New plan wath stock financing: units d. On the basis of the analysis in parts a through c, and given that operating leverage is lower under the new setup, which plan is the riskiest, which has the highest capected Ei5, and which would you recommend? Assume that there is a fairly high probability of sales falling as low as 250,000 units. Determine EPSoete and EPSstock at that sales level to helo assess the riskiness of the two finencing plans. Negative values should be indicated by a minus sign. Do not round intermediate calculations. flound your answers to the neare cent. EPSoebis 5 Epsotocal 5