In considering the newly levered versus formerly unlevered, Financial Management

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In considering the newly levered versus formerly unlevered

An unlevered firm with a market value of $1 million has 40,000 shares outstanding. The firm restructures itself by issuing 200 new par bonds with face value $1,000 and an 6% coupon. The firm uses the proceeds to repurchase outstanding stock. In considering the newly levered versus formerly unlevered firm, what is the break-even EBIT? Ignore taxes.

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Financial Management: In considering the newly levered versus formerly unlevered

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Financial Management: In considering the newly levered versus formerly unlevered

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