Question: Foundation, Incorporated, is comparing two different capital structures, an all - equity plan ( Plan I ) and a levered plan ( Plan II )

Foundation, Incorporated, is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 150,000 shares of stock outstanding. Under Plan II, there would be 100,000 shares of stock outstanding and $1.2 million in debt outstanding. The interest rate on the debt is 5 percent, and there are no taxes. What is the break-even EBIT?

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