ABC Co. has a WACC of 12 percent. Its debt sells at a yield to maturity of 6 percent, and its tax rate is 30 percent. Its cost of equity is 16 percent. What is ABCs Equity/Total Assets ratio?

The KoSol Co. can raise $200,000 by (1) selling 1,000 shares of common stock at $200 each or (2) selling new bonds that will net the firm $200,000 and carry an interest rate of 9 percent. Currently, the firm has $200,000 of debt at 7% and 2,000 common stock outstanding. If the firms tax rate is 25 percent, what is the indifferent EBIT (EBIT*)?