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An all-equity firm has decided to issue $4 million worth of bonds and use the proceeds to repurchase 100,000 existing shares. There are currently 5 million shares outstanding. The annual interest rate on the new debt will be 8%. What is the break-even EBIT? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response

An all-equity firm has decided to issue $4 million worth of bonds and use the proceeds to repurchase 100,000 existing shares. There are currently 5 million shares outstanding. The annual interest rate on the new debt will be 8%. What is the break-even EBIT? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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An all-equity firm has decided to issue $4 million worth of bonds and use the proceeds to repurchase 100,000 existing shares. There are currently 5 million shares outstanding. The annual interest rate on the new debt will be 8%. What is the break-even EBIT? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response
Transcribed Image Text:An all-equity firm has decided to issue $4 million worth of bonds and use the proceeds to repurchase 100,000 existing shares. There are currently 5 million shares outstanding. The annual interest rate on the new debt will be 8%. What is the break-even EBIT? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit any commas and the $ sign in your response. For example, an answer of $1,000.50 should be entered as 1000.50.) Numeric Response
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