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An all-equity financed firm has $6m in assets and the stock price is $200. If the firm restructures with 40 percent debt which creates interest

An all-equity financed firm has $6m in assets and the stock price is $200. If the firm restructures with 40 percent debt which creates interest expense of $240,000 per year and the firm's tax rate is 40 percent, what is the break-even EBIT?

Multiple Choice

  • $336,000

  • $380,000

  • $432,000

  • $600,000

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