The wall street j reports about capital structure

Reference no: EM13884698

The Wall Street J reports about capital structure of well - known company in India. The company has a capital structure that consists of $ 120 million in common equity (15 million shares) and $80 million in long term debt with an average interest rate of 11 percent. The company is considering an expansion project near Mumbai that will cost $22 million. The project will be financed either by issuing long term debt at a cost of 12.5 percent, or the sale of new common stock at $35 per share. The firm's marginal tax rate is 40 %. What is the EBIT indifference point between the two financing options?

Reference no: EM13884698

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