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Question 27 (2 points) VP Estates requires $500,000 for a new project. They currently have 100,000 common shares outstanding and $100,000 in interest ($2 million
Question 27 (2 points) VP Estates requires $500,000 for a new project. They currently have 100,000 common shares outstanding and $100,000 in interest ($2 million in bonds at 5% coupon). The company can raise the funds by: Option #1 - issue common shares at $10 each Option #2 - issue bonds with a 7% coupon The indifference EBIT (EBIT*) is: $205,000 $105,000 $95,000 $1,150,000
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