Sunshine Candy Company's capital structure for the past year of operation is shown below. First mortgage bonds at 12% $2

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Sunshine Candy Company's capital structure for the past year of
operation is shown below.
First mortgage bonds at 12% $2,000,000 Debentures at 15%
1,500,000 Common stock (1,000,000 shares) 5,000,000 Retained
earnings 500,000 TOTAL $9,000,000
The federal tax rate is 50 percent. Sunshine Candy Company,
home-based in Orlando, wants to raise an additional $1,000,000 to
open new facilities in Tampa and Miami. The firm can accomplish
this via two alternatives: (1) It can sell a new issue of 20-year
debentures with 16 percent interest; or (2) 20,000 new shares of
common stock can be sold to the public to net the candy company $50
per share. A recent study, performed by an outside consulting
organization, projected Sunshine Candy Company's long-term EBIT
level at approximately $6,800,000. a. Find the indifference level
of EBIT (with regard to earnings per share) between the suggested
financing plans. b. Which plan will result in a higher EPS?