Abc corporation is comparing two different capital, Financial Management

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Abc corporation is comparing two different capital

ABC Corporation is comparing two different capital structures, an all equity plan (Plan I) and a levered plan (Plan II). Under Plan I, ABC would have 56,059 shares of stock outstanding. Under Plan II, there would be 29,444 shares of stock outstanding and $ 392,650 in debt outstanding. The interest rate on debt is 5% and there are no taxes. What is the break-even EBIT?

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Financial Management: Abc corporation is comparing two different capital

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Financial Management: Abc corporation is comparing two different capital

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