Question: ABC Corporation is comparing two different capital structures, an all equity plan (Plan l) and a levered plan (Plan II). Under Plan I, ABC would

ABC Corporation is comparing two different capital structures, an all equity

ABC Corporation is comparing two different capital structures, an all equity plan (Plan l) and a levered plan (Plan II). Under Plan I, ABC would have 60,000 shares of stock outstanding. The share price is $20. Under Plan II, ABC would issue $400,000 worth of debt and repurchase some of its shares. The interest rate on debt is 5% and there are no taxes. What is the break-even EBIT? $70,000 $30,000 $40,000 $60,000

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