As Chief Financial Officer of the Magnificent Electronics Company (MEC), you are considering a recapitalisation plan that would convert MEC from its current all-equity capital structure to one including substantial financial leverage. MEC now has 2,000,000 ordinary shares outstanding, which are selling for $10 each, and you expect the companys EBIT to be $3,000,000 per year for the foreseeable future. The recapitalisation proposal is to issue $8,000,000 worth of long-term debt at an interest rate of 8.0% and use the proceeds to repurchase 800,000 ordinary shares worth $8,000,000.