Break-even level of ebit between these two capital structure

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Reference no: EM132059297

1. Northeast Lobster currently has 18,300 shares of stock outstanding. It is considering issuing $88,000 of debt at an interest rate of 6.1 percent. The break-even level of EBIT between these two capital structure options is $69,000. For this to be true, what is the current stock price? Ignore taxes. Please show work

2. You are long 300 shares ATVI which you bought at $38. It is now trading at $42. You want to protect your position. What kind of option position would suggest? What about the strike price?

3. A firm has a cost of debt of 5.5 percent and a cost of equity of 14.7 percent. The debt-to-equity ratio is 1.17. There are no taxes. What is the firm's weighted average cost of capital? Please show work.

Reference no: EM132059297

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