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Ernst Electrical has 7,500 shares of stock outstanding and no debt. The new CFO is considering issuing $50,000 of debt and using the proceeds to

Ernst Electrical has 7,500 shares of stock outstanding and no debt. The new CFO is considering issuing $50,000 of debt and using the proceeds to retire 600 shares of stock. The coupon rate on the debt is 8.5 percent. What is the break-even level of earnings before interest and taxes between these two capital structure options?

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