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A corporation has an all equity capital structure of 2,000,000 shares with a current share price of $20. The company wishes to raise $20,000,000 at
A corporation has an all equity capital structure of 2,000,000 shares with a current share price of $20. The company wishes to raise $20,000,000 at the current share price of $20 per share or borrow the $20,000,000 at a cost of 5%. What is the EBIT-EPS indifference point of these two plans? The relevant tax rate is 30%
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The EBITEPS indifference point is the level of EBIT Earnings Before Interest and Taxes at which the earnings per share EPS is the same for two differe...
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Corporate Finance and Investment decisions and strategies
Authors: Richard Pike, Bill Neale, Philip Linsley
8th edition
1292064064, 978-1292064161, 1292064161, 978-1292064062
