Company XYZ has no debt outstanding and a total market value of $12 million. EBIT is projected to be $750 000 next year. The firm is considering a debt issue of $10 million with a 7.5% interest rate and will use the funds to buy back shares in the firm. There are currently 500 000 shares outstanding and there are no taxes in the economy. What is the breakeven level of EBIT between the two capital structures?

Please show your work without using a financial calculator

A) 83333.33

B) 150,000

C) 900,000

D) 693750

E) 1312500