Question: Franklin corporation is comparing two different capital structures, an all equity plan (plan 1) and a levered plan (plan 2). Under plan 1, the company

Franklin corporation is comparing two different capital structures, an all equity plan (plan 1) and a levered plan (plan 2). Under plan 1, the company would have 315,000 shares of stock outstanding. Under plan 2, there would be 225,000 shares outstanding and $4.14 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes.

A)If EBIT is $750,000, which plan will result in the highest EPS?

B)What is the break even EBIT?

Please show work for part A and B

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