Dippity Doodle Noodle Makers Has a Capital Structure That Consists

Multiple Choice

Dippity Doodle Noodle Makers has a capital structure that consists of2.0 million shares outstanding and $2.0 million of debt at 8% interest.The company is planning a major plant expansion must decide between the following two financing plans.Option 1 is to increase debt by $1.0 million at 9% interest and sell 10,000 new shares of stock at $50 per share.Option 2 is to sell 30,000 new shares of stock at $50 per share.What would be the indifference point and considering that EBIT is expected to be $10,000,000 which option would be best

A) Indifference of $10,750,000.Use stock option.
B) Indifference of $1,600,000.Use stock option.
C) Indifference of $16,270,000.Use the debt option.
D) Indifference of $9,250,000.Use the debt option.