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A firm currently has $ 4 , 0 0 0 , 0 0 0 in debt and $ 2 , 0 0 0 , 0

A firm currently has $

4, 000, 000

in debt and $

2, 000, 000

in equity. They are considering to restructure by issuing $

1

million in equity to reduce their debt. The firm currently has

125, 000

shares outstanding and the cost of debt is

7 % .

Tax rate

= 0 % .

Calculate the break

-

even EBIT.

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