Problem #$2(15$ marks$)$ The LP company has $$10$ million in assets, $80\%$ financed by debt and $20\%$ financed by common stock. The interest rate on the debt is$15\%,$ and the stock book value is $$10$ per share. LP is considering two financing plans for an expansion to $$15$ million in assets. Under plan A$,$ the debt$-$to$-$total$-$asset ratio will be maintained, but new debt will cost $18\%.$ New common stock will be sold at $$10$ per share. Under plan B$,$ only new common stock at $$10$ per share will be issued. The tax rate is $40\%.$ a$.$ Calculate the EBIT$/$EPS indifference point. $(6$ marks$)$ b$.$ If EBIT is expected to be $15\%$ of total assets, compute the EPS under the two expansion alternatives? $(3$ marks$)$ c$.$ Would you have expected the results you get in part b from your calculation of EBIT indifference in part a$?$ Briefly explain. $(1$ marks$)$ d$.$ Instead of Plan B $($raising new financing with common shares$),$ if the company decided they should raise only half the amount needed by issuing common shares at $$10$ each and finance the remainder of the project with $4\%$ preferred shares, what would the indifference point be$?$