A Winnipeg Firm Is Considering Two Separate Capital Structures

question 263

Multiple Choice

A Winnipeg firm is considering two separate capital structures. The first is an all equity plan consisting of 25,000 shares of stock. The second plan would consist of 10,000 shares of stock and $90,000 in debt at a cost of 8%. Ignore taxes. What is the break-even EBIT?

• A) $12,000
• B) $15,000
• C) $18,000
• D) $19,000
• E) $21,000

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Definitions:

Organ

A specialized structure, such as the heart or liver, or a flower, made up of tissues and adapted to perform a specific function or group of functions.

Tissues

Groups of similar cells that perform specific functions within an organism; examples include muscular, nervous, epithelial, and connective tissues.

Organize

To arrange or put in order; to coordinate activities or efforts systematically for efficiency and effectiveness.

CRISPR/Cas9

A revolutionary genome-editing technology allowing scientists to modify an organism’s DNA with high precision.