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A firm currently uses no debt financing. It currently has 500,000 shares outstanding. The price per share is $25. It is considering restructuring using $6,000,000

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A firm currently uses no debt financing. It currently has 500,000 shares outstanding. The price per share is $25. It is considering restructuring using $6,000,000 million in debt with an interest rate of 8%. Assume the corporate tax rate is 30%. Calculate the breakeven EBIT. Show that EPS and ROE are the same for the case of no debt financing and debt financing at the breakeven EBIT. No Debt Debt Breakeven EBIT Interest EBT Taxes NI I EPS ROE

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