10 points ebook References Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below. Debt @ Common stock $40,000 120,000 Debt Comon stock $120,000 60,000 Total $180,000 Total $100,000 Common shares 12,000 Common shares 6,000 a. Compute EPS if EBIT are $12,000, $14,400, and $51,000 (assume a 10 percent tax rate). (Round the final answers to 2 decimal places. Do not leave any empty spaces; input a O wherever it is required.) Cain Able EPS at $12,000 EPS at $14,400 EPS at $51,000 b. What is the relationship between EPS and level of EBIT? 1. Earnings before interest and taxes is less than cost of debt. Cain does better Both are at equilibrium Able does better 2. Earnings before interest and taxes equals cost of debt. 3. Earnings before interest and taxes is greater than cost of debt. ff the cost of debt went up to 10 percent and all other factors remained equal, what would be the indifference point for EBIT