Room and Board is considering two capital structures that have a break-even EBIT of $22,200. The all-equity capital structure would have 15,000 shares outstanding. The levered capital structure would have 11,050 shares of stock and $82,000 of debt. What is the interest rate on the debt? Ignore taxes.

Multiple Choice

• 7.47%

• 8.15%

• 7.13%

• 6.40%

• 6.77%