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Consider two companies in a world with no taxes that are alike except in borrowing choices. District Corp. has no debt financing, and Energy Corp.
Consider two companies in a world with no taxes that are alike except in borrowing choices. District Corp. has no debt financing, and Energy Corp. uses debt financing. District Corp. has 400,000 shares outstanding and pays no interest. Energy Corp. has 250,000 share outstanding and pays $500,000 in interest. What is the Break Even EBIT for the two capital structures? A) $960,000 B) $1,333,333 C) $2.575,832 D) There is not enough info.
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