Northwestern Lumber Products currently has 12,400 shares of stock outstanding and no debt. Patricia, the financial manager, is considering issuing $160,000 of debt at an interest rate of 6.95 percent and using the proceeds to repurchase shares. Given this, how many shares of stock will be outstanding once the debt is issued if the break-even level of EBIT between these two capital structure options is $48,000? Ignore taxes.

Select one:

a. 2,873 sharesb. 3,051 sharesc. 3,025 sharesd. 2,558 sharese. 2,667 shares