A firm is considering two different capital structures. The first option is an all-equity firm with...
A firm is considering two different capital structures. The first option is an all-equity firm with 75,000 shares of stock. The second option is 50,000 shares of stock plus some debt. Ignoring taxes, the break-even level of earnings before interest and taxes between these two options is $95,000. How much money is the firm considering borrowing if the interest rate is 8 percent? Please type out a clear step-by-step explanation
A) $353,519
B) $395,833
C) $386,852
D) $400,186
E) $403,519
Homework Answers
Answer B
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