Question: You are comparing two possible capital structures for a firm. The first option is an all equity firm. The second option involves the use of

You are comparing two possible capital structures for a firm. The first option is an all equity firm. The second option involves the use of $3.8 million of debt. The break-even point between these two financing options occurs when the earnings before interest and taxes (EBIT) are $428,000. Given this, you know that leverage is beneficial to the firm

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Th ey could have made my situation worse.