financing. Its operating income (carnings before interest and taxes $1 million, and it pays taxes at a 40 percent rate. 1 in assets and, because it is all-cquity financed, S5 million in Suppose the firm is considering replacing half of its cquity fina with debt financing bearing an interest rate of 8 percent. 13.1 Seattle Health Plans currently uses zero-debt fina or EBIT) is has $5 million in cquity equity financing