Oscorp is considering two capital structures that have a break-even EBIT of $25,200. The all-equity capital structure would have 16,000 shares outstanding. The levered capital structure would have 11,800 shares of stock and $87,000 of debt. What is the interest rate on the debt? Ignore taxes.

Multiple Choice

7.22%

7.60%

8.69%

6.82%

7.97%