Question
(Capl. Str.) A company has 6.43 million common shares outstanding and $66 million of debt with an interest rate of 5.6%. The company wants to
(Capl. Str.) A company has 6.43 million common shares outstanding and $66 million of debt with an interest rate of 5.6%. The company wants to raise another $52.8 million. It can do so by selling an additional 3.215 million shares of common stock (the equity plan) or by taking out a bank loan with an interest rate of 6.8% (the debt plan). The company has no preferred stock. The corporate tax rate is 25%. At what level of EBIT would the company have the same earnings per share (EPS) under either plan? Specify the answer in $ mln., to the nearest $0.01 mln., drop the $ symbol.
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