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Katlin Markets is debating between a levered and an unlevered capital structure The all equity capital structure would consist of 75000 shares of stock The debt and equity option would consist of

Katlin Markets is debating between a levered and an unlevered capital structure. The all-equity capital structure would consist of 75,000 shares of stock. The debt and equity option would consist of 40,000 shares of stock plus $320,000 of debt with an interest rate of 6.25 percent. What is the break-even level of earnings before interest and taxes between these two options? Ignore taxes.

a.$46,333.33

b.$44,140.71

c.$42,208.15

d.$49,666.67

e.$42,857.14

 

Apr 23 2020 View more View Less

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