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What is the break-even level of ebit

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Question - A firm is considering a capital restructuring. The existing firm is unlevered and has 100,000 shares of stock outstanding at a market price of $50 per share. The new structure would include $250,000 of debt with a coupon rate (interest rate) of 10 percent. All of the money raised from the debt issue would be used to repurchase stock. What is the break-even level of EBIT between the two structures?

Reference no: EM133174418

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