Galaxy Products Is Comparing Two Different Capital Structures,an All-Equity Plan

question 5

Multiple Choice

Galaxy Products is comparing two different capital structures,an all-equity plan (Plan I) and a levered plan (Plan II) .Under Plan I,Galaxy would have 178,500 shares of stock outstanding.Under Plan II,there would be 71,400 shares of stock outstanding and $1.79 million in debt outstanding.The interest rate on the debt is 10 percent and there are no taxes.What is the breakeven EBIT?

• A)$287,878.78
• B)$298,333.33
• C)$351,111.11
• D)$333,333.33
• E)$341,414.14

---

Definitions:

Patriarchal View

A social system perspective where males hold primary power and dominate in roles of political leadership, moral authority, and control over property.

Traditionalist

A person who advocates for the preservation of traditional values, practices, and institutions, often resisting modern changes and innovations.

Gender Roles

Socially and culturally defined behaviors, tasks, and responsibilities assigned to individuals based on their perceived sex.

Risks

The potential for experiencing harm or loss associated with an action or decision.