Suppose you are the only owner of a firm, John Adams Co, a food production...
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Accounting
Suppose you are the only owner of a firm, John Adams Co, a food production company located in Toronto. Your firm is currently unlevered with 5,000 shares outstanding and assets valued at $250,000. Suppose that the company issues $150,000 debt with 12% interest to buy back some of the outstanding shares.
From the standpoint of EPS, what is the break-even level of EBIT which both, unlevered and levered, EPS are equal? Assume there is no corporate tax.
Enter the correct answer in the blank box below. If a decimal point appears, round it to two decimal places.
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