ADA, Inc. currently has 20,000 shares of stock outstanding at a market value of $40 a share. The firm is currently 100% financed with equity. ADA is considering a restructuring which will include issuing $400,000 of bonds at par value with a coupon rate of 6%. What is the break-even EBIT?

Question options:

a)

$12,000

b)

$24,000

c)

$36,000

d)

$48,000

e)

$60,000