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Question 23 1 pts Neptune Corporation is looking to expand but does not currently have the capital on hand to finance the expansion. The firm's
Question 23 1 pts Neptune Corporation is looking to expand but does not currently have the capital on hand to finance the expansion. The firm's current capital structure is: Debt of $50 million at a 6% interest rate and Common Stock of $100 million (2,500,000 shares) The firm has two financing alternatives: (Equity): Sell an additional $10 million in common stock at the current price. (Debt): Issue an additional $10 million of debt at an 3% coupon rate. At what level of operating income (EBIT) will the firm be indifferent between the two plans? Apply a 21% tax rate. $11,300,000 $10,000,000 $6,300,000 $20,000,000 $2,100,000
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