Creative Industries Inc.is looking to finance a new project with either debt or equity.The firm anticipates that its breakeven EPS-EBIT point is when EBIT reaches $3,000,000.If the projected EBIT are $3,500,000 for the foreseeable future,then to maximize EPS the firm should issue:

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Since the firm's breakeven EPS-EBIT point is when EBIT reaches $3,000,000 and the projected EBIT is higher at $3,500,000, the firm has a cushion to take on additional debt. By issuing debt, the company can increase its earnings per share (EPS) without diluting current shareholders' ownership. Equity financing would lead to dilution of current shareholders, reducing the EPS. Preferred shares or a dual class of equity are not necessary in this case and would be more complicated and expensive forms of financing compared to debt. Therefore, the best choice is to issue debt to maximize EPS.