Question
Max industries is planning to invest in a number of projects during the next fiscal year. Given the substantial capital investment, the board of directors
Max industries is planning to invest in a number of projects during the next fiscal year. Given the substantial capital investment, the board of directors has assigned you with finding the break points in their capital structure so that in the future they calculate properly the cost of capital. The firm can borrow up to $20,254,356 in new debt before the interest rate increases; the firm can then borrow any amount at the higher rate. Taxes are 23.6% and total equity is 44% of the target capital structure. The firm does not use any preferred equity. In addition, there will be $24,366,318 in retained earnings available at the end of this fiscal year. Calculate the break point in the MCC schedule for Debt. Enter your answer in the box below, to the nearest penny.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started