Kelso Electric is an all-equity firm with 51,500 shares of stock outstanding. The company is considering the issue of $350,000 in debt at an interest rate of 8 percent and using the proceeds to repurchase stock. Under the new capital structure, there would be 32,000 shares of stock outstanding. Ignore taxes. What is the break-even EBIT between the two plans?

Multiple Choice

• $63,385

• $45,949

• $73,949

• $51,692

• $80,111