Tortuga, Inc. is looking to raise $4 million for new equipment to enhance the efficiency of its operations. The firm currently is capitalized with 250,000 shares of equity at a market price of $35 per share and also has $2,000,000 of debt with an interest rate of 9%. The company believes that with the new capital they could achieve an EBIT of $1,500,000. Assume new equity could be issued at current market price and that new debt would still carry a 9% coupon. The company has a 25% marginal tax rate. At what level of EBIT would Tortuga be indifferent between financing the project with Equity or Debt?

$752,000

$985,400

$576,000

$1,327,500