There Are No Taxes

Multiple Choice

There are no taxes. EBIT is expected to be $2.5 million, but could be as high as $3.5 million if an economic expansion occurs, or as low as $2 million if a recession occurs. All values are market
Values.
What is EPS during an expansion for the proposed capital structure?

A) $4.17
B) $5.00
C) $5.83
D) $6.00
E) $7.55