Ad Nauseum Inc. has a target capital structure of 40% debt and 60% equity. Up to $10,000 of debt can be issued at 12%, but any additional debt will cost the firm 14%. Retained earnings for the current year are $50,000. Next year's expected dividend is $4.00, dividends are growing at 8%, and the current stock price is $20.00. If Ad Nauseum issues new common stock, the flotation costs will be 10% of the issue price. The firm's tax rate is 31%.

a) What is the break point for equity financing?