An All-Equity Financed Firm Has $500 in Assets and the Stock

question 84

Multiple Choice

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) $20
• B) $150
• C) $200
• D) $500

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