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A company with 10,000,000 shares outstanding and $2,000,000 in debt outstanding is considering changing to an all-equity capital structure. Under the proposed all-equity capital structure,

A company with 10,000,000 shares outstanding and $2,000,000 in debt outstanding is considering changing to an all-equity capital structure. Under the proposed all-equity capital structure, there would be 12,000,000 shares outstanding. Assume the break-even EBIT is $300,000. What is the interest rate on the company's debt?

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