Question: Buff Ltd. is considering two choices for their capital structure: Option A: All equity financing Option B: Debt-equity ratio equal to 0.25 Which option is

Buff Ltd. is considering two choices for their capital structure: Option

Buff Ltd. is considering two choices for their capital structure: Option A: All equity financing Option B: Debt-equity ratio equal to 0.25 Which option is the best choice for Buff Ltd. if its EBIT is less than the break-even level? (Assume there are no taxes) Because the debt-equity ratio is less than half, Buff Ltd. should choose the leverage option Buff Ltd. should choose the unlevered option since its EBIT is less than the break-even level Buff Ltd. should choose the unlevered option since the debt-equity ratio is less than half None of the above as the information provided is insufficient

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