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You are comparing two possible capital structures for a firm. The first option is an all-equity firm. The second option involves the use of $1.

Enter your homework question or assignment here ...You are comparing two possible capital structures for a firm. The first option is an all-equity firm. The second option involves the use of $1.5 million of debt. The break-even point between these two financing options occurs when the earnings before interest and taxes (EBIT) are $230,000. Given this, you know that leverage is beneficial to the firm:

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