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What amount of bonds must be retired to accomplish

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A company currently sells 75,000 units annually. At this sales level, its EBIT is $4 million, and its DTL is 2.0. The firm's debt consists of $15 million in bonds with a 9.5% coupon. The company is considering a new production method, which will entail an increase in fixed costs but a decrease in variable costs, and will result in a DOL of 1.6. Being concerned about the total risk of the firm, the CEO wants to keep the DTL at 2.0. If EBIT remains at $4 million, what amount of bonds must be retired to accomplish this?

Reference no: EM133060768

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