Kolby Corp. is comparing two different capital structures. Plan I would result in 14,000 shares of stock and $100,000 in debt. Plan II would result in 8,000 shares of stock and $200,000 in debt. The interest rate on the debt is 6 percent. a. Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $80,000. The all-equity plan would result in 20,000 shares of stock outstanding. What is the EPS for each of these plans?

b.	In part (a), what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan?
c.	Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II?

d-1	Assuming that the corporate tax rate is 40 percent, what is the EPS of the firm?

d-2	Assuming that the corporate tax rate is 40 percent, what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan?

d-3	Assuming that the corporate tax rate is 40 percent, when will EPS be identical for Plans I and II?