Kolby Corp. is comparing two different capital structures. Plan I would result in 15,000 shares of stock and $100,000 in debt. Plan II would result in 11,500 shares of stock and $170,000 in debt. The interest rate on the debt is 5 percent.

a.

Ignoring taxes, compare both of these plans to an all-equity plan assuming that EBIT will be $70,000. The all-equity plan would result in 20,000 shares of stock outstanding. What is the EPS for each of these plans? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

	EPS
Plan I	4.33 $
Plan II	5.35 $
All equity	3.50 $

b.	In part (a), what are the break-even levels of EBIT for each plan as compared to that for an all-equity plan? (Do not round intermediate calculations.)

	EBIT
Plan I and all-equity	20,000 $
Plan II and all-equity	20,000 $

c.	Ignoring taxes, at what level of EBIT will EPS be identical for Plans I and II? (Do not round intermediate calculations.)

EBIT

20,000 $

d-1	Assuming that the corporate tax rate is 40 percent, what is the EPS of the firm? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

	EPS
Plan I	2.60 $
Plan II	3.21 $
All equity	2.10 $

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? (Do not round intermediate calculations.)

	EBIT
Plan I and all-equity	20,000 $
Plan II and all-equity	20,000 $

d-3	Assuming that the corporate tax rate is 40 percent, when will EPS be identical for Plans I and II? (Do not round intermediate calculations.)

EBIT

20,000 $

These are all the correct answers, but I only understand how to get part (a) why is almost everything 20,000? Could you go through steps? Thank you!