Austin Co. and Boston Co. are identical firms in all respects except for their capital structures. Austin is all equity financed with $500,000 in stock. Boston uses both stock and debt; its stock is worth $200,000 and the interest rate on its debt is 6 percent. Both firms expect EBIT to be $60,000. Ignore taxes. An individual investor, Tom, owns $10,000 worth of Boston's stock. Tom could generate exactly the same cash flows and rate of return for his investment in Boston Co. by selling his Boston shares (for $10,000 in cash) and investing in Austin using the following strategy:

		Invest $10,000 in Austin stock funded by his own cash of $10,000.
		Invest $20,000 in Austin stock funded by his own cash of $10,000 and debt of $10,000.
		Invest $15,000 in Austin stock funded by his own cash of $10,000 and debt of $5,000.
		Invest $25,000 in Austin stock funded by his own cash of $10,000 and debt of $15,000.
		None of the abov