What is the EBIT that makes them have the same EPS

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Question - Peter and John are doing the identical business but they adopt different capital structure. Peter prefers an all-equity plan, so his company is fully financed by issuing 125,000 shares of stock. John prefers a combination of equity and debt, so his company consists of 120,000 shares of stock and $100,000 of debt with an annual cost of 4%. Ignore taxes. What is the EBIT that makes them have the same EPS?

Reference no: EM133094157

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