The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories

abe forester and 3 of his friends from college have interested a group of venture capitalists in backing their idea. The proposed operation would consist of a series of retail outlets to distribute and service a full line of vacuum cleaners and accessories. These stores would be located in Dallas, Houston, and San Antonia. to finance the new venture two plans have been proposed. Plan A is an all common equity structure in which 2.2 million dollars would be raised by selling 88,000 shares of common stock. Plan B would involve issuing 1.2 million dollars in long term bonds with an effective interest rate of 12.2% plus $1.0 million would be raised by selling 44,000 shares of common stock. The debt funds raised under plan B have no fixed maturity date, in that this amount of financial level is considered a permanent part of the firm's capital structure. Able and his partners plan to use a 35% tax rate in their analysis, and they have hired you on a consulting basis to do the following: A. Find the EBIT indifference level associated with the two financing plans. B. Prepare a pro form income sheet for the EBIT level solved for in part A that shows that EPS will be the same regardless whether plan A or Plan B is chosen. A. Find the EBIT indifference level associated with the two financing plans. The EBIT indifference level with the two financing plans is $-------. Round to the nearest dollar