Question: 22 Room and Board is considering two capital structures that have a break-even EBIT of $25,200. The all-equity capital structure would have 16,000 shares outstanding.

Room and Board is considering two capital structures that have a break-even EBIT of $25,200. The all-equity capital structure would have 16,000 shares outstanding. The levered capital structure would have 11,800 shares of stock and $87,000 of debt. What is the interest rate on the debt? Ignore taxes. 7.97% 7.22% 8.69% 7.60% 6.82%

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