Currently, a firm has $400,000 in debt outstanding and 4,000,000 shares outstanding. The firm is considering changing to an all-equity capital structure, which would result in 5,000,000 shares outstanding. What is the interest rate on the firm's debt if the break-even EBIT is $150,000?
Currently, a firm has $400,000 in debt outstanding and 4,000,000 shares outstanding. The firm is considering changing to an all-equity capital structure, which would result in 5,000,000 shares outstanding. What is the interest rate on the firm's debt if the break-even EBIT is $150,000?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 5P
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