An all-equity plan and levered plan

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Reference no: EM131889446

Galaxy Products is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Galaxy would have 250000 shares of stock outstanding. Under Plan II, there would be 245090 shares of stock outstanding and $180000 in debt outstanding. The interest rate on the debt is 6.0 percent and there are no taxes. What is the breakeven EBIT?

Reference no: EM131889446

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