A firm has a cost of debt of 5.9 percent and a cost of equity of 10.7 percent. The debtequity ratio is .57. There are no taxes. What is the firm's weighted average cost of capital?

a- 8.06%

b- 8.27%

c- 7.46%

d- 9.43%

e- 8.96%

Kelso Electric is an all-equity firm with 50,750 shares of stock outstanding. The company is considering the issue of $345,000 in debt at an interest rate of 7 percent and using the proceeds to repurchase stock. Under the new capital structure, there would be 31,500 shares of stock outstanding. Ignore taxes. What is the break-even EBIT between the two plans?

a-54,573

b-39,518

c-68,974

d-63,668

e-44,458