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Lexington is considering undertaking a new project which involves raising capital of $15,000,000. Debt can be issued at 12%. The new equity shares can be

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Lexington is considering undertaking a new project which involves raising capital of $15,000,000. Debt can be issued at 12%. The new equity shares can be issued for $100 per share. There is no preferred stock. Two alternatives are available: Plan A: Raising the entire amount by equity shares Plan B: Raising $15,000,000 where 1/3 is debt and 2/3 is equity. At what level of operating income (EBIT) will the company be indifferent to choose between the two plans to raise capital for their investment? Apply a 21% tax rate. $7.110,000 $3,380,000 O $8,000,000 $1.800.000 $474,000

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