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Q2. Assuming a 40 percent tax rate, what is the financial breakeven point for each plan? Table 1 Plan 1 Plan 2 Interest Paid $25,000

Q2. Assuming a 40 percent tax rate, what is the financial breakeven point for each plan?

Table 1

Plan 1 Plan 2
Interest Paid $25,000 $50,000
Preferred Divdend $3,000 $1,500
Common Shares Outstanding 200,000 100,000

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