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An All-Equity Financed Firm Has $45,000 in Assets and the Stock

Question 109

Multiple Choice

An all-equity financed firm has $45,000 in assets and the stock price is $10. If the firm restructures with 30 percent debt which creates interest expense of $810 per year and the firm's tax rate is 21 percent, what is the break-even EBIT?


A) $1,157
B) $1,500
C) $1,967
D) $2,700

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