Kelso Electric is an all-equity firm with 52,250 shares of stock outstanding. The company is considering...

70.2K

Verified Solution

Question

Finance

Kelso Electric is an all-equity firm with 52,250 shares of stockoutstanding. The company is considering the issue of $355,000 indebt at an interest rate of 9 percent and using the proceeds torepurchase stock. Under the new capital structure, there would be32,500 shares of stock outstanding. Ignore taxes. What is thebreak-even EBIT between the two plans?

Answer & Explanation Solved by verified expert
4.0 Ratings (441 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Kelso Electric is an all-equity firm with 52,250 shares of stockoutstanding. The company is considering the issue of $355,000 indebt at an interest rate of 9 percent and using the proceeds torepurchase stock. Under the new capital structure, there would be32,500 shares of stock outstanding. Ignore taxes. What is thebreak-even EBIT between the two plans?

Other questions asked by students