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New England is considering additional financing of $10000 it currently has $50000 of 12% annual interest bonds and 10000 shares of common stock
New England is considering additional financing of $10000 it currently has $50000 of 12% annual interest bonds and 10000 shares of common stock outstanding the firm can obtain the financing through a 12% annual interest bond issue or through the sale of 1000 shares of common stock the firm has a 40% tax rate . a) calculate to EBIT - EPS Coordinates for each plan by selecting any two EBIT values and finding their associated EPS values. B ) plot the to financing plans and a set of EBIT - EPS axes. C) On the basis of your graph in part B, at what level of EBIT does the bond plan become superior to the stock plan?
