yodacaia

How much debt can be issued for 3%? I think you have missed the digit.
Anyway, the calulation goes like this:
Amount of debt before % cost change/proportion of debt in capital structure= x
$9m/0.7 = 12.86m
which ever is lower out of x and 12.86 is your answer. This simulates building the capital structure in the correct proportion and finding the ‘break point’.