ADA, Inc Currently Has 20,000 Shares of Stock Outstanding at a a Market

Multiple Choice

ADA, Inc. currently has 20,000 shares of stock outstanding at a market value of $40 a share. The firm is currently 100% financed with equity. ADA is considering a restructuring which will include issuing $400,000 of bonds at par value with a coupon rate of 6%. What is the break-even EBIT?

A) $12,000
B) $24,000
C) $36,000
D) $48,000
E) $60,000