Given the information in Figure 12.1, what is the break-even EBIT-EPS

Given the information in Figure 12.1, what is the break-even EBIT-EPS for Crane Manufacturing Inc.?

A) EBIT = $100,000 and EPS = $0.15
B) EBIT = $250,000 and EPS = $0.35
C) EBIT = $350,000 and EPS = $0.45
D) EBIT = $400,000 and EPS = $0.65

ANSWER

B
Explanation: B) (EBIT-0)(1-t)/n = (EBIT – I)(1-t)/n
EBIT(.7)/500,000 = (EBIT – 100,000)(.7)/300,000, EBIT = $250,000 and EPS = $0.35.