XYZ Co. is currently 100% equity financed, has 25,000 shares outstanding at a price of $30 a share, and produces an annual EBIT of $150,000. The firm is considering issuing $300,000 of debt and repurchasing shares. The cost of debt is 12%. The tax rate is 30%. By how much will EPS change if the company issues the debt and EBIT remains constant?

A) $0.98

B) $1.06

C) $1.12

D) $1.23

E) $1.42