Burtronics Inc. is in the process of determining its optimal level of debt. Burtronics is a zero growth firm with all of its net income paid in dividend. Complete the following table, and recommend the optimal debt level for Burtronics. Make sure to show all your work, restrict your answers to the alternatives given, and justify your answer., ,Debt level* ,$200,000 ,$500,000, ,Cost of debt ,10% ,13%, ,Cost of equity ,16% ,18%, ,EBIT ,$150,000 ,$150,000, ,Interest Expenses , $20,000 ,$ , ,EBT , $130,000 ,$, ,Taxes (40%) , $52,000 ,$, ,EAT , $78,000 ,$, ,Value of equity ,$487,500 , , ,Value of debt ,$ ,$500,000, ,Value of the Burtronics , , , ,Stock price , , , ,Shares outstanding ,10,000 , ,• ,• * The difference of $300,000 in debt will be used to repurchase shares.,,
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