Consider Two Firms That Are Identical in Every Way Except

Consider two firms that are identical in every way except that one has $1,200 of debt and 350 shares of stock outstanding,while the other is all-equity and has 400 shares of stock outstanding.Assume that the debt is a perpetuity with annual coupons at the rate of 7%.What is each firm's earnings per share if EBIT is $5,000? Assume a tax rate of 40%.

A) EPS_L = 8.39; EPS_E = 7.50
B) EPS_L = 8.39; EPS_E = 8.39
C) EPS_L = 7.50; EPS_E = 7.50
D) EPS_L = 7.50; EPS_E = 8.39
E) EPS_L = 8.43; EPS_E = 7.50