OG Electronics is currently financed with 50 million shares of common equity and $200 million of 8% long-term debt with 30% tax rate. OG is considering raising an additional $300 million to fund their expansion. OG is trying to decide between (1) issuing 30 million additional shares at $10 and (2) issuing $300million additional long-term debt at 10%. At what EBIT is OG indifference between the two plans?

Answer rating: 100% (QA)

Answer To find the EBIT indifference point between the two financing options we need to calculate th... View the full answer