The Cofrada and La Herradura companies are the same in all respects, except their capital structure. The Cofrada company is fully funded with capital and has $ 750,000 in stock. The La Herradura company uses both shares and its own debt; His shares are worth $ 375,000 and the interest rate on the debt is 6%. Both companies expect EBIT to be $ 80,000. Please do not take taxes into account.