Becker industries is considering an all equity capital structure against one with both debt and equity. the all equity capital structure would consist of 32,000 shares of stock. the debt and equity option would consist of 16,000 shares of stock plus $300,000 of debt with an interest rate of 7 percent. what is the break-even level of earnings before interest and taxes between these two options? ignore taxes.

You are the owner of a local honda dealership. unlike other dealerships in the area, you take pride in your “no haggle” sales policy. last year, your dealership earned record profits of $1.5 million. however, according to the local chamber of commerce, your earnings were 10 percent less than either of your competitors. in your market, the price elasticity of demand for midsized honda automobiles is 4.5. in each of the last five years, your dealership has sold more midsized automobiles than any other honda dealership in the nation. this entitled your dealership to an additional 30 percent off the manufacturer’s suggested retail price (msrp) in each year. taking this into account, your marginal cost of a midsized automobile is $11,000. what price should you charge for a midsized automobile if you expect to maintain your record sales?