Question: OKR Ltd is deciding to use two different capital structures to expandthe business. While comparing both the capital structures: In Plan I an all-equity capital

OKR Ltd is deciding to use two different capital structures to expandthe business. While comparing both the capital structures: In Plan I an all-equity capital structure, OKR Ltd will have 0.6 million shares outstanding while 300,000 shares would be outstanding in Plan II. Plan II is a levered plan and this would have $10,000,000.00 worth of outstanding debt. The tax rate would be 30.00% while interest rate on debt will be 10.00%.

(i) What would be the break-even EBIT for OKR Ltd?

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