Calculate the cross over ebit

Reference no: EM133290889

Question: Vermont Mining wants to raise R150 million in new capital. The company can sell equity at R10 per share, or sell bonds at par with a 14 percent coupon rate. Vermont Mining currently has an interest expense of R50 million. The company has 80 million common shares outstanding and is in the 34 percent tax bracket.

How to Calculate the cross over EBIT at which the EPS from issuing new debt or new equity is the same.

Reference no: EM133290889

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