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Juno Industrial Products Is Debating Between a Leveraged and an Unleveraged

question 88

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Juno Industrial Products is debating between a leveraged and an unleveraged capital structure. The all equity capital structure would consist of 20,000 shares of stock. The debt and equity option
Would consist of 14,000 shares of stock plus $170,000 of debt with an interest rate of 8%. What is
The break-even level of earnings before interest and taxes between these two options? Ignore
Taxes.


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