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Question 23 1 pts Neptune Corporation is planning a business expansion and currently has a capital structure consisting of common stock of $5 million (250,000
Question 23 1 pts Neptune Corporation is planning a business expansion and currently has a capital structure consisting of common stock of $5 million (250,000 shares) and debt of $10 million with a 4% coupon rate. The firm has two different financing plans they need to decide between. The two plans are as follows: Plan A (equity): Sell additional shares at the current price for a total of $2 million Plan B (debt): Issue an additional $2 million of debt with a 4% coupon rate What level of operating income (EBIT) would make the firm indifferent to either plan? Assume a 21% tax rate. $2,000,000 $7,000,000 $1,750,000 $680,000 $750,000
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