Question: Suppose Square is planning for a capital restructuring that involves increasing its existing BDT 80 million in debt to BDT125 million. The interest rate on

Suppose Square is planning for a capital restructuring that involves increasing its existing BDT 80 million in debt to BDT125 million. The interest rate on the debt is 9 percent and this debt will be used for share repurchase. The firm currently has 10 million shares outstanding, and the price per share is BDT45. Calculate the break-even EBIT. Show detailed calculation. Explain how tax rate can influence the Capital structure policy.

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