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Business, 17.12.2019 06:31 Robloxdemonduckyt

Aspen company is financed with $50 million of 8% debt and $75 million of common equity. the firm has 1 million shares of common stock outstanding. aspen needs to raise $20 million and is undecided between two possible plans for raising this capital: plan a: equity financing. under this plan, common stock will be sold at $100 per share. plan b: levered financing. under this plan, half of the capital will be raised with equity at $100 per share and half will be raised by selling 12% coupon bonds. at what level of operating income (ebit) will the firm be indifferent between the two plans? assume a 34% marginal tax rate.

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Aspen company is financed with $50 million of 8% debt and $75 million of common equity. the firm has...
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