Equity plan and levered plan

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Reference no: EM131309894

ABC Corporation is comparing two different capital structures, an all equity plan (Plan I) and a levered plan (Plan II). Under Plan I, ABC would have 74,250 shares of stock outstanding. Under Plan II, there would be 39,125 shares of stock outstanding and $ 527,344 in debt outstanding. The interest rate on debt is 14% and there are no taxes. What is the break-even EBIT?

Reference no: EM131309894

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