Ernst Electrical has 9,000 shares of stock outstanding and no debt.The new CFO is considering issuing $80,000 of debt and using the proceeds to retire 1,500 shares of stock.The coupon rate on the debt is 7.5 percent.What is the break-even level of earnings before interest and taxes between these two capital structure options?
A)$18,500
B)$21,000
C)$24,000
D)$32,500
E)$36,000

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The Answer of Ernst Electrical has 9,000 shares of stock outstanding and no debt.The new CFO is considering issuing $80,000 of debt and using the proceeds to retire 1,500 shares of stock.The coupon rate on the debt is 7.5 percent.What is the break-even level of earnings before interest and taxes between these two capital structure options?
A)$18,500
B)$21,000
C)$24,000
D)$32,500
E)$36,000

Ernst Electrical Has 9,000 Shares of Stock Outstanding and No