PT Wentfor currently has no preferred stock but has 15,000 shares of common stock circulating. The company has a marginal tax rate of 40%. PT Wentfor requires IDR 5,000,000 for a project.
PT Wentfor has 2 financing options:
- Sold 10,000 shares of common stock at Rp 500/share
- Issued IDR 5,000,000 bonds with 15% interest
Based on this information,
a. determine the EBIT indifference level associated with the two funding plans the.
b. If PT Wentfor has a projected project EBIT that will be received is IDR 3,000,000. Options
what payment should the company use? Explain!

Answer rating: 100% (QA)

a To determine the EBIT indifference level associated with the two funding plans we need to calculat... View the full answer