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2. Foggy Futures Weather Forecasters, Inc. in the 40% tax bracket wants to acquire capital. Option A is to increase its $4,000,000 debt of 6%
2. Foggy Futures Weather Forecasters, Inc. in the 40% tax bracket wants to acquire capital. Option A is to increase its $4,000,000 debt of 6% bonds by an additional $2,000,000 at 8% and increase its stock outstanding from 20,000 shares to 25,000 shares. Option B is to increase debt by $1,000,000 @ 8% and doubling its current stock outstanding. The expected EBIT IS $1,100,000 (a) What is the indifference point for this company? (c) Which option should they choose
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