Answer:
$1.62
Explanation:
Calculation to determine the break even EBIT
First step is to determine the Number of shares purchased
Number of shares purchased= $25,000 / $25
Number of shares purchased= $1,000
Second step is to determine the EBIT
EBIT / 10,000 = [EBIT - ($25,000 * 0.073)] / (10,000 - 1,000)
EBIT / 10,000 = (EBIT - $1,825) / 9,000
9,000 EBIT = 10,000 EBIT - $16,425,000
1,000 EBIT = $16,425,000
EBIT=$16,425,000/1,000
EBIT = $16,425
Now let determine the Earning per Shares at Break-even level of earning
Earning per Shares at Break-even level of earning= [EBIT - ($25,000 * 0.073)] / (10,000 - 1,000)
Earning per Shares at Break-even level of earning= ($16,425 - $1,825) / 9,000
Earning per Shares at Break-even level of earning= $14,600 / 9000
Earning per Shares at Break-even level of earning= $1.62
Therefore the break even EBIT is $1.62
