Question: There are two different capital structure plans. Plan A will result in 1 0 0 , 0 0 0 shares of stock and $ 5

There are two different capital structure plans. Plan A will result in 100,000 shares of stock and $500,000 in debt. Plan B will result in 200,000 shares of stock and no debt. Interest rate on debt is 8%.
If you believe the firm will do better than the break-even EBIT, then you should go with Plan B.

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