Consider a firm with an EBITDA of $$14,000,000$ and an EBIT of $$11,000,000.$ The firm finances its assets with $$51,000,000$ debt $($costing $7\mathrm{.}0$ percent all of which is tax deductible$)$ and $10,500,000$ shares of stock selling at $$8\mathrm{.}00$ per share. The firm is considering increasing its debt by $$25,000,000,$ using the proceeds to buy back shares of stock. The firm$$s tax rate is $21$ percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $$11,000,000.$