Round Hammer 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 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding and $1.49 million in debt outstanding. The interest rate on the debt is 6 percent and there are no taxes. Required:
a. If EBIT is $400,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)
b. If EBIT is $600,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e. g., 32.16.)
c. What is the break-even EBIT?

Required: 1-a. the marketing manager argues that a $5,000 increase in the monthly advertising budget would increase monthly sales by $9,000. calculate the increase or decrease in net operating income. 1-b. should the advertising budget be increased ? yes no hintsreferencesebook & resources hint #1 check my work 8.value: 1.00 pointsrequired information 2-a. refer to the original data. management is considering using higher-quality components that would increase the variable expense by $2 per unit. the marketing manager believes that the higher-quality product would increase sales by 10% per month. calculate the change in total contribution margin. 2-b. should the higher-quality components be used? yes no