Question: Titan Corp. is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would

Titan Corp. is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 160,000 shares of stock outstanding. Under Plan II, there would be 110,000 shares of stock outstanding and $1.4 million in debt outstanding. The interest rate on the debt is 7 percent and there are no taxes. a. If EBIT is $400,000, what is the EPS for each plan? b. If EBIT is $650,000, what is the EPS for each plan? c. What is the break-even EBIT?

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