Earnings before interest and taxes-debt ratio

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Siracha Company has currently has $10,000,000 in equity and $0 in debt. Their earnings before interest and taxes (EBIT) of $1,000,000. Siracha Company is considering a 20% debt ratio, and at this level, could acquire capital at 8% interest. The applicable tax rate is 40%. Find Siracha Company’s net income at a 20% debt level

Reference no: EM131070670

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