Kaplan Inc. is comparing two different capital structures. Plan I would result in the firm having 250,000 shares outstanding and debt of $2,250,000. Plan II would result in the firm having 190,000 shares outstanding and debt of $4,950,000. The interest rate on the debt is 8%.

15. What is the break-even EBIT between the two capital structure plans?

A) $960,000 B) $1,040,000 C) $1,080,000 D) $1,120,000 E) None of the above.

16. What will be the EPS under Plan I if EBIT is $1,300,000?

A) $3.62 B) $4.48 C) $5.89 D) $5.20 E) $6.84