(a) At what EBIT level will EPS $0 for each financing plan?
(b) Graph the two financing plans on a set of EBIT EPS axes. (Calculate and plot EPS at EBIT levels of $250,000, $500,000, $1,000,000, $1,500,000, $2,500,000, and $3,500,000.)
(c) According to your graph, at what EBIT level does the bond financing plan become superior?
(d) If the firm estimates EBIT of $3,000,000, which financing plan would you recommend?