Ernst Electrical has 7,500 shares of stock outstanding and no debt.The new CFO is considering issuing $50,000 of debt and using the proceeds to retire 600 shares of stock.The coupon rate on the debt is 8.5 percent.What is the break-even level of earnings before interest and taxes between these two capital structure options?
A)$48,360
B)$50,020
C)$49,740
D)$52,500
E)$53,125

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The Answer of Ernst Electrical has 7,500 shares of stock outstanding and no debt.The new CFO is considering issuing $50,000 of debt and using the proceeds to retire 600 shares of stock.The coupon rate on the debt is 8.5 percent.What is the break-even level of earnings before interest and taxes between these two capital structure options?
A)$48,360
B)$50,020
C)$49,740
D)$52,500
E)$53,125

Ernst Electrical Has 7,500 Shares of Stock Outstanding and No