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The KoSol Co . can raise $ 2 0 0 , 0 0 0 by ( 1 ) selling 1 , 0 0 0 shares

The KoSol Co. can raise $200,000 by (1) selling 1,000 shares of common stock at $200 each or (2) selling new bonds that will net the firm $200,000 and carry an interest rate of 9 percent. Currently, the firm has $200,000 of debt at 7% and 2,000 common stock outstanding. If the firms tax rate is 25 percent, what is the indifferent EBIT (EBIT*)?

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