Question
A corporation has an all equity capital structure of 100,000 shares with a current share price of $10. The company wishes to raise $1,000,000 at
A corporation has an all equity capital structure of 100,000 shares with a current share price of $10. The company wishes to raise $1,000,000 at the current share price of $10 per share or borrow the $1,000,000 at a cost of 3%. What is the EBIT-EPS indifference point of these two plans? The relevant tax rate is 30%
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
