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Galaxy products is comparing two different capital structures, an all-equity plan (plan 1) and a leveraged plan (plan 2). Under plan 1. Galaxy would have
Galaxy products is comparing two different capital structures, an all-equity plan (plan 1) and a leveraged plan (plan 2). Under plan 1. Galaxy would have 178,500 shares of stock outstanding. Under plan 2, there would be 71,400 shares of stock outstanding and $1.79 million in debt outstanding. The interest rate on the debt is 10 percent and there are no taxes. What is the break even EBIT?
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