Plan A: is an all common equity structure with $2.4 million being raised by selling 80,000 shares of common stock
Plan B: Issuing $1.2 mil in long-term bonds with an effective interest rate of 11.8% plus $1.2 mil would be raised by selling 40,000 shares of common stock. Debt funds raide under this plan have no fixed maturity date and is considered a permanent part of of the firms capital structure. Find the EBIT difference level association with both plans and prepare a pro forma income statement for the EBIT indifference level.