A corporation has an all equity capital structure of 2,000,000 shares with a current share price of $20. The company wishes to raise $20,000,000 at the current share price of $20 per share or borrow the $20,000,000 at a cost of 5%. What is the EBIT-EPS indifference point of these two plans? The relevant tax rate is 30%

Answer rating: 100% (QA)

The EBITEPS indifference point is the level of EBIT Earnings Before Interest and Taxes at which the earnings per share EPS is the same for two differe... View the full answer