Hello. I need help with Questions 2-4. I have already answered #1. It is provided because of the variables that are needed to calculate #'s 2 & 3.

1.Anall-equity firm currently has3,000,000 shares of stock outstanding and is considering borrowing$8,000,000 at6% and buying backone-half of those shares. What is thebreak-even EBIT assuming a tax rate ofzero?

A. $1,440,000

B. $460,000

C. $960,000 Your answer is correct.

D. $2,880,000

2.For the firm in #1 what is its EPS(a) before; and(b) after borrowing the$8,000,000 if its tax rate is zero and its EBIT is $1,000,000?

A. $0.35 $0.33

B. $0.35; $0.48

C. $0.24; $0.24

D. $0.33; $0.35

3.For the firm in#1 what is its EPS(a) before; and(b) after borrowing the$8,000,000 if its tax rate is zero and its EBIT is $600,000?

A. $0.20; $0.08

B. $0.60; $0.80

C. $0.08 $0.20

D. $0.80; $0.60

4.If the company described in questions 1- 3 expects its annual EBIT to be a constant$1,000,000 for the foreseeablefuture, should it undertake the capitalrestructuring?

A. No, because the EPS is above the EBIT.

B. No, because the EBIT is below thebreak-even EBIT.

C. Yes, because the EBIT is above thebreak-even EBIT.

D. Yes, because the EPS is equal to the EBIT.