Bartlett Specialists Is Considering Two Different Capital Structures

Multiple Choice

Bartlett Specialists is considering two different capital structures.The first option consists of 15 000 shares of stock.The second option consists of 9000 shares of stock plus $80 000 of debt at an interest rate of 7.5 per cent.Ignore taxes.What is the break-even level of earnings before interest and taxes (EBIT) between these two options?

A) $18 600
B) $19 400
C) $20 800
D) $15 000
E) $20 000