Juno Industrial Products Is Debating Between a Leveraged and an Unleveraged

question 88

Multiple Choice

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.

• A) $42,208
• B) $44,141
• C) $45,333
• D) $46,667
• E) $48,928

---

Definitions:

Primitive Fighting Instinct

An innate reaction or response aimed at defending oneself from threats or danger, often associated with survival mechanisms.

Intentional Injury

Harm or damage inflicted on a person on purpose, as opposed to by accident.

Aggression

Aggression is behavior characterized by acts of harm or attempts to harm oneself, others, or objects, driven by intent to cause pain or injury.

Violent Victimization

Experiencing harm or injury as a result of violent activities or crimes committed by another individual or group.