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An all-equity financed firm has $450 in assets and the stock price is $45. If the firm restructures with 20 percent debt which creates interest

An all-equity financed firm has $450 in assets and the stock price is $45. If the firm restructures with 20 percent debt which creates interest expense of $10 per year and the firm's tax rate is 40 percent, what is the break-even EBIT?

Multiple Choice

  • $30

  • $35

  • $45

  • $50

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