Consider the information provided to answer the following questions.

Capital structure:

55 percent debt and 45 percent common equity

Net Income of $150,000.

0 dividend.

cost of common equity is 13%

cost of new equity is 14%.

The effective annual interest rate on its new borrowings is 10% for amounts below $500,000 and will increases by 3% for amounts over $600,000. The company's tax rate is 40%.



a.    Equity Break point?



b.    debt break point?



c. Calculate the MCC if $400,000 is needed for an upcoming project.



d. Calculate the MCC if $850,000 is needed for an upcoming project.



e. Calculate the MCC if $1,100,000 is needed for an upcoming project.