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Find at the break-even level

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Problem 1: Widgets-R-Us is considering changing its capital structure away from all-equity. Assume there are no taxes. At the break-even level, the:

Multiple Choice

Option 1: earnings before taxes is the same for the levered and unlevered firm.
Option 2: Incorrect
Option 3: earnings per share is the same for the levered and unlevered firm.
Option 4: earnings per share for the levered option are exactly double those of the unlevered option.
Option 5: advantages of leverage exceed the disadvantages of leverage.
Option 6: firm's earnings before interest and taxes are equal to zero.

Reference no: EM132751423

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