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    Breakeven EBIT

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    An unlevered firm with a market value of $1 million has 50,000 shares outstanding. The firm restructures itself by issuing 200 new par bonds with face value of $1,000 and an 8% coupon. The firm uses the proceeds to repurchase outstanding stock. In considering the newly levered versus formerly unlevered firm, what is the breakeven EBIT? Ignore taxes.

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    https://brainmass.com/economics/personal-finance-savings/breakeven-ebit-firm-103491

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    Please see the attached file.

    An unlevered firm with a market value of $1 million has 50,000 shares outstanding. The firm restructures itself by issuing 200 new par bonds with face value of $1,000 and an 8% coupon. The firm uses the proceeds to repurchase outstanding stock. In ...

    Solution Summary

    Breakeven EBIT is determined.

    $2.19

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