Debt, because EPS will be $1.95 Equity, because EPS will be $2.13 5 pts Question...
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Debt, because EPS will be $1.95 Equity, because EPS will be $2.13 5 pts Question 10 Tortuga, Inc. is looking to raise $4 million for new equipment to enhance the efficiency of its operations. The form currently is capitalized with 250,000 shares of equity at a market price of $35 per share and also has $2,000,000 of debt with an interest rate of 9%. The company believes that with the new capital they could achieve an EBIT of $1,500,000. Assume new equity could be issued at current market price and that new debt would still carry a 9% coupon. The company has a 25% marginal tax rate. At what level of EBIT would Tortuga be indifferent between financing the project with Equity or Debt? 5985.400 $1,327,500 $752.000 $576,000 Question 11 5 pts Afirm has a pre-tax cost of debt of 8%, a debt to capital ratio of 25%, total debt of $2,500,25% tax rate, perpetuity NAL 06 DODAO
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