Multiple Choice
A firm is considering two different capital structures.The first option is an all-equity firm with 32,000 shares of stock.The second option is 20,000 shares of stock plus some debt.Ignoring taxes,the break-even level of earnings before interest and taxes between these two options is $48,000.How much money is the firm considering borrowing if the interest rate is 8 percent?
A) $175,000
B) $225,000
C) $250,000
D) $275,000
E) $300,000
Correct Answer:
Verified
Correct Answer:
Verified
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