QUESTION :Sterns Stews Inc. is considering a new capital structure. Itscurrent a

QUESTION :Sterns Stews Inc. is considering a new capital structure. Itscurrent and proposed capital structures are the following:CURRENT PROPOSEDTotal assets $150 million $150 millionDebt 25 million 100 millionEquity 125 million 50 millionCommon stock price $50 $50Number of shares 2500000 1000000Interest rate 12% 12%Sterns Stews president expects next years EBIT to be $20 million butit may be 25 percent higher or lower. Ignoring taxes perform an EBIT/eps analysis. What is the indifference level of earnings before interestand taxes? Should Sterns Stews change its capital structure? Why?