Chick lsquon fish is considering two different capital, Ask an Expert

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Chick ‘N Fish is considering two different capital structures. The first option consists of 25,000 shares of stock. The second option consists of 15,000 shares of stock plus $150,000 of debt at an interest rate of 7.5 percent. Ignore taxes. What is the break-even level of earnings before interest and taxes (EBIT) between these two options?

Answer

$2,813
$3,134
$16,410
$28,125
$31,338

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