Galaxy Products is comparing two different capital structures, an all$-$equity

plan $($Plan I$)$ and a levered plan $($Plan II$).$ Under Plan I, Galaxy would have

$178,500$ shares of stock outstanding. Under Plan II$,$ there would be $71,400$

shares of stock outstanding and $$1\mathrm{.}79$ million in debt outstanding. The interest

rate on the debt is $10$ percent and there are no taxes. The projected EBIT is

$$280,000.$ Which capital structure plan would you prefer, if you were a

shareholder in the firm? Support your response with relevant computations