* I need help figuring out the cross multiplication here, please show the steps! I keep getting the wrong answer for the EBIT of 500,000*

taxes at 30%

No Debt

Assets

$5,000,000

Debt

-

Equity

5,000,000

Share price

$10

Shares outstanding

500,000

Interest Rate

	D = E D/E = 1
Assets	$5,000,000
Debt	2,500,000
Equity	2,500,000
Share price	$10
Shares outstanding	250,000
Interest Rate	10%

-

EPS with no debt = EPS with debt

EBIT (1 - t) / shares = (EBIT - interest expense) (1-t) / shares

EBIT(1 - .3) / 500,000 = (EBIT - 250,000)(1 - .3) / 250,000

.7 EBIT = 1.4 EBIT - 350,000

EBIT = $500,000