Your firm currently unlevered $($no debt$)$ and has an equity value of $$20$ million. There are $800,000$ shares outstanding and the cost of debt is $7\%.$ You are considering to restructure by issuing $$4$ million of debt to buy back stock. EBIT is projected to be $$1$m under normal market conditions. If there is a economic boom, EBIT is expected to be $30\%$ higher. If there is an economic recession, EBIT is expected to be $40\%$ lower. Ignore taxes.

Suppose your firm decides not to go through with restructuring. That must mean management believes EBIT will be lower than the break$-$even EBIT.