Janess Corporation Is an All Equity fiRm with 500,000 Shares

Multiple Choice

Janess Corporation is an all equity firm with 500,000 shares outstanding. It is considering changing its capital structure to include debt. If it does, its shares will reduce to 375,000 and it will incur
Interest of $200,000. Given this information, calculate the indifference EBIT.

A) $800,000
B) $850,000
C) $875,000
D) $900,000
E) $925,000