19. Brooks Corporation is financed with $32 million of 9% debt and $68 million of common equity. The firm has 1 million shares of common stock outstanding. Brooks needs to raise $25 million and is undecided between two possible plans for raising this capital:

Plan A: Equity financing. Under this plan, common stock will be sold at $62.50 per share.

Plan B: Debt financing. Under this plan, 11% coupon bonds will be sold. At what level of operating income (EBIT) will the firm be indifferent between the two plans? Assume a 21% marginal tax rate.

Use breakeven EBIT formula