Question: Room and Board is considering two capital structures that have a break-even EBIT of $31,800. The all-equity capital structure would have 18,200 shares outstanding. The

Room and Board is considering two capital structures that have a break-even EBIT of $31,800. The all-equity capital structure would have 18,200 shares outstanding. The levered capital structure would have 13,450 shares of stock and $98,000 of debt. What is the interest rate on the debt? Ignore taxes.

A. 7.60%
B. 8.05%
C. 9.68%
D. 8.87%
E. 8.47%

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