Question: ( 10 ) 3 . Your firm is considering two financing plans . The key information follows : use a 40 % tax rate .

( 10 ) 3 . Your firm is considering two financing plans . The key information follows : use a 40 % tax rate . Source of Funds Plan A Plan B Long - term Debt $500 at 6% $2 , 500 at 10% Preferred Stock 50 shares , $2 10 shares , $ 2 dividend per share dividend per share Common Stock 60 shares 15 shares Draw the EPS- EBIT line for each plan on the same set of axes . Over what range of EB IT would you prefer Plan A

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