Cooke Co. is comparing two different capital structures. Plan I would result in 8,500 shares of stock and $361,000 in debt. Plan II would result in 12,000 shares of stock and $228,000 in debt. The interest rate on the debt is 10 percent.

Requirement 1:

Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $61,000. The all-equity plan would result in 18,000 shares of stock outstanding. Compute the EPS for each plan. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	EPS
Plan I	$
Plan II	$
All-equity plan	$

Requirement 2:

(a)	In Requirement (1), what is the break-even level of EBIT for Plan I as compared to that for an all-equity plan? (Do not round intermediate calculations.)

EBIT

$

(b)	In Requirement (1), what is the break-even level of EBIT for Plan II as compared to that for an all-equity plan? (Do not round intermediate calculations.)

EBIT

$

Requirement 3:

Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations.)

EBIT

$

Requirement 4:

Assume the corporate tax rate is 35 percent.

(a)	Compute the EPS for each plan. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	EPS
Plan I	$
Plan II	$
All-equity plan	$

(b)	What is the break-even level of EBIT for Plan I as compared to that for an all-equity plan? (Do not round intermediate calculations.)

EBIT

$

(c)	What is the break-even level of EBIT for Plan II as compared to that for an all-equity plan? (Do not round intermediate calculations.)

EBIT

$

(d)	At what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations.)

EBIT

$