Destruction Builders Has 10,000 Shares of Stock Outstanding and No

Multiple Choice

Destruction Builders has 10,000 shares of stock outstanding and no debt.The new CFO is considering issuing $65,000 of debt and using the proceeds to retire 750 shares of stock.The coupon rate on the debt is 7.2 percent.What is the break-even level of earnings before interest and taxes between these two capital structure options?

A) $42,035
B) $43,695
C) $65,000
D) $60,200
E) $62,400