Question: 3. Your firm is considering two financing plans. The key information follows: use a 25% tax rate. Source of Funds Plan A Plan B Long-term

3. Your firm is considering two financing plans. The key information

3. Your firm is considering two financing plans. The key information follows: use a 25% tax rate. Source of Funds Plan A Plan B Long-term Debt Preferred Stock $500 at 6% 50 shares, $2 dividend per share 60 shares $2,500 at 10% 10 shares, $2 dividend per share 15 shares Common Stock - - - - - - - - - - - - - - - - - - - - - - - - - Draw the EPS-EBIT line for each plan on the same set of axes. Over what range of EBIT would you prefer Plan A

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