Question: Galaxy production is comparing two different capital structures and all equity plan (plan I) and a levered plan (plan II). Under Plan I the company

Galaxy production is comparing two different capital structures and all equity plan (plan I) and a levered plan (plan II). Under Plan I the company would have 175,000 shares of stock outstanding. Under plan II, there would be 90,000 shares of stock outstanding and $1.4 million in debt. The interest rate on the debt is 7 percent and there are no taxes. What is the break-even EBIT?

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