In an EPS-EBIT Graphical Relationship, the Debt Ray and Equity

Multiple Choice

In an EPS-EBIT graphical relationship, the debt ray and equity cross. At this point the equity and debt are:

A) equivalent with respect to EPS but above and below this point equity is always superior.
B) at breakeven in EPS but above this point debt increases EPS via leverage and decreases EPS below this point.
C) equal but away from breakeven equity is better as fewer shares are outstanding.
D) at breakeven and MM Proposition II states that debt is the better choice.
E) at breakeven and debt is the better choice below breakeven because small payments can be made.