Aaron Rocks Inc. is currently traded at $45/share with 8 million shares outstanding, and it has $200 million long-term debt. The probability of default is 10% at current debt levels. In the event of default, Aaron Rosenblum, the CEO of Aaron Rocks, estimates that the firm would incur direct and indirect costs having a present value of $50 million. Now the firm is considering the sale of $100 million in common equity at a price of $40 per share. The proceeds of this stock issue would be used entirely to reduce the firm's long-term debt. Aaron estimates that the probability of default would fall to 2% following the new stock issue. The corporate tax rate is 21%. (a) What will be the net impact of the stock issue on the total firm value? (b) What will be Aaron Rocks' stock price after the equity issue is announced? ) What will be the stock price after completion of the equity issue? Aaron Rocks Inc. is currently traded at $45/share with 8 million shares outstanding, and it has $200 million long-term debt. The probability of default is 10% at current debt levels. In the event of default, Aaron Rosenblum, the CEO of Aaron Rocks, estimates that the firm would incur direct and indirect costs having a present value of $50 million. Now the firm is considering the sale of $100 million in common equity at a price of $40 per share. The proceeds of this stock issue would be used entirely to reduce the firm's long-term debt. Aaron estimates that the probability of default would fall to 2% following the new stock issue. The corporate tax rate is 21%. (a) What will be the net impact of the stock issue on the total firm value? (b) What will be Aaron Rocks' stock price after the equity issue is announced? ) What will be the stock price after completion of the equity issue