Franklin Coin, Inc. is considering two capital structures. The key information follows. Assume a 40 percent tax rate and expected EBIT of $50,000.

Table

Source of capital Structure 1 Structure 2

- Long-term debt $500,000 @ 8% $ 350,000 @ 7%

- Common stock 10,000 shares 20,000 shares

a) Calculate two EBIT-EPS coordinates for each of the structures.

b) Indicate over what EBIT range, if any, each structure.

Show your work,

please.

Thank you