[Cindy78]

Hi,
I am having trouble with the algebra part of the EBIT-EPS Analysis. I am not sure how my text is coming up with the answer. I can't get past this part what is my next step?

(EBIT-0)* (1-.36)/86,000 = (EBIT - 150,000) * (1-.36)/43,000

I understand that the EBIT= 300,000 but I cannot get the algebra correct to get that answer. This is a practice problem and I just want to get the math down so I can apply it correctly in the future.
Here is the plan
Plan A. the company will raise 2.4 million by selling 86,000 shares C.S
Plan B Raise the money by selling 1.2 million in long term bonds at 12.5% interest plus 1.2 million raised in selling 43,000 shares of C.S. No maturing rate on debt fund and a corporate tax rate of 36%