5 Homework 1 0 Saved Problem 16-8 Leverage and Earnings (LO1) Reliable Gearing currently is all-equity-financed. It has 16,000 shares of equity outstanding, selling at $100 a share. The firm is considering a capital restructuring. The low-debt plan calls for a debt issue of $260,000 with the proceeds used to buy back ftock. The high-debt plan would exchange $460,000 of debt for equity. The debt will pay an interest rate of 10%. The firm pays no taxes. a. What will be the debt-to-equity ratio if it borrows $260,000? (Round your answer to 2 decimal places.) to-equity ralio b. If earnings before interest and tax (EBIT) are $170,000, what will be earnings per share (EPS) if Reliable borrows $260,000? (Round your answer to 2 decimal places.) EPS c. What will EPS be if it borrows $460,000? (Round your answer to 2 decimal places) EPS