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Question 9 5 pts Tortuga, Inc. is looking to raise $2 million for new equipment to enhance the efficiency of its operations. The firm currently is capitalized with 100,000 shares of equity at a market price of $42 per share and also has $1,000,000 of debt with an interest rate of 8%. The company believes that with the new capital they could achieve an EBIT of $500,000. Assume new equity could be issued at current market price and that new debt would still carry a 8% coupon. The company has a 25% marginal tax rate. Should Tortuga issue Equity or Debt? Debt, because EPS will be $2.88 Equity, because EPS will be $2.13 Debt, because EPS will be $1.95 Equity, because EPS will be $2.72 Question 10 5 pts Tortuga. Inc. is looking to raise $ 2 million for new equipment to enhance the efficiency of its operations. The firm currently is capitalized with 100,000 shares of equity at a market price of $42 per share and also has $1,000,000 of debt with an interest rate of 8%, The company believes that with the new capital they could achieve an EBIT of $500.000. Assume new equity could be issued at current market price and that new debt would still carry a 8% 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? $576,000 $985.400 51.327.500 $752.000

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