Marcus owns and manages OLK which is an all-equity firm. If he works 40 hours a week, the firm's annual EBIT will be $68,000. If he increases his hours to 65 a week, EBIT will increase to $148,000. The firm has a current value of $680,000. Marcus wants to expand the business and needs $320,000 to do so. The firm can borrow the needed funds at an interest rate of 8 percent or it can issue equity. Ignore taxes. Marcus will prefer:

a. debt with a 40 hour week as that option provides him with the highest cash flow

b. debt with a 65 hour week as his cash flow will be $11,000 greater than his next best option

c. equity with a 65 hour week as his cash flow will be $100,640

d. equity with a 40 hour week as that option provides him with the highest cash flow

e. debt with a 65 hour week as his cash flow will be $21,760 higher than if he works 65 hours and shares his equity