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Your firm is trying to determine whether it should finance a project requiring $800,000 with new common stock or with debt. The firm is faced
Your firm is trying to determine whether it should finance a project requiring $800,000 with new common stock or with debt. The firm is faced with the following financing alternatives: I: Issue new common stock. Sale price of the common stock is expected to be $40 per share. II: Issue new bonds with a coupon rate of 12%. The firm has a marginal tax rate of 34%, the company currently has 40,000 shares of common stock outstanding, and $90,000 face value of 10% debt outstanding. 20) The indifference level of EBIT is: A) $99,000. B) $66,600. C) $333,000. D) $297,000 . 21) EPS at the indifference level of EBIT is: A) $3.17. B) $4.80. C) $5.27. D) $5.90. please show the work
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