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What is Pelican breakeven EBIT

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Reference no: EM132603826

Question - As the CFO of Pelican Holdings, you must choose between the following two capital structures:

1. Debt with a face value of $500 million and 40 million ordinary shares.

2. Debt with a face value of $400 million and 44 million ordinary shares.

The debt pays interest of 5% p.a. with annual compounding, in both cases. Answer the following questions, given that the corporate tax rate is 30%.

What is Pelican's breakeven EBIT?

Reference no: EM132603826

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