Question: Please explain step by step how this is solved. 4. Kelso Electric is debating between a leveraged and an unleveraged capital structure. The all equity

Please explain step by step how this is solved.

4. Kelso Electric is debating between a leveraged and an unleveraged capital structure. The all equity capital structure would consist of 40,000 shares of stock. The debt and equity option would consist of 25,000 shares of stock plus $280,000 of debt with an interest rate of 7 percent. What is the break-even level of earnings before interest and taxes between these two options? Ignore taxes. A. $42,208 B. $52,267 C. $49,667 D. $44,141 E. $46,333 EBIT/40,000 = [EBIT - ($280,000

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