Abe Forester and 3 of his friends from college have interested a group of venture capitalists

Abe Forester and 3 of his friends from college have
interested a group of venture capitalists in backing their business 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 Antonio. To finance the new venture two
plans have been proposed: Plan A is an all-common equity structure in which
$2.1 Million dollars would be raised by selling 82,000 shares of common stock.
Plan B would involve issuing 1.3 million dollars in long-term bonds with an
effective interest rate of 11.9% plus $0.8 million would be raised by selling
41,000 shares of common stock. The debt funds raised under plan B have no fixed
maturity date, in that this amount of financial leverage is considered a
permanent part of the firm’s capital structure. Able and his partners plan to
use a 40% 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 statement for EBIT level
solved for in part A that shows that EPS will be the same regardless whether
plan A or B is chosen. A. Find the EBIT indifference level associated with the
two financing plans. The EBIT indifference level associated with the two
financing plans is $——. ( Round to the nearest dollar.