Kelso Electric Is Debating Between a Leveraged and an Unleveraged

Kelso Electric is debating between a leveraged and an unleveraged capital structure.The all equity capital structure would consist of 40,000 shares of stock.The debt and equity option would consist of 25,000 shares of stock plus $280,000 of debt with an interest rate of 7 percent.What is the break-even level of earnings before interest and taxes between these two options? Ignore taxes.

A) $42,208
B) $44,141
C) $46,333
D) $49,667
E) $52,267