A firm plans to issue $20m of stock. It can issue $8m of debt before it needs to issue debt at a higher rate.

The firm has no preferred stock and $10m of retained earnings which it can use for financing.

If the firm's weights are 50% stock and 50% debt, which breakpoint will come first?

Group of answer choices

can't tell from the information given

both occur at the same time

equity

debt