What is the break-even ebit

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Problem 1: An all-equity financed firm has $500 in assets and the stock price is $20. If the firm restructures with 15 percent debt which creates interest expense of $30 per year and the firm's tax rate is 21 percent, what is the break-even EBIT?

a. 200
b. 20
c. 500
d. 150

Reference no: EM132808153

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