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How are the ebit equilibrium and eps impacted

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My T needs to raise $125,000 to expand her growing business. One option is to sell 4,500 common shares. A second option is to issue a $75,000 bond; the balance would be raised by selling common shares. The coupon rate for the bond is 10%, The marginal tax rate is 35%

Problem 1: Calculate the EBIT equilibrium

Problem 2: Calculate the EPS

Problem 3: Suppose Carly decides to have a coupon rate of 12% instead. How are the EBIT equilibrium and EPS impacted?

Reference no: EM132969789

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