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Can you explain how to work this problem. I know the answers are $1,111,111 and $1,818,182 respectively but can't

figure out how to get there. Any help would be greatly appreciated.


A firm has a $500,000 debt limit before interest rates (kd) change, taxes=30% and debt is 45% of the capital structure. There will be a net income of $1,300,000 from which the firm will keep $1,000,000 as retained earnings. Calculate the break points in the MCC schedule for Debt and Common Equity.

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