FCOJ, Inc., a prominent consumer products firm, is debating whether to convert its all-equity capital structure...

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FCOJ, Inc., a prominent consumer products firm, is debatingwhether to convert its all-equity capital structure to one that is30 percent debt. Currently, there are 5,800 shares outstanding, andthe price per share is $57. EBIT is expected to remain at $32,000per year forever. The interest rate on new debt is 8 percent, andthere are no taxes.

a.
Allison, a shareholder of the firm, owns 100 shares of stock.What is her cash flow under the current capital structure, assumingthe firm has a dividend payout rate of 100 percent? (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
b. What will Allison’s cash flow be under the proposed capitalstructure of the firm? Assume she keeps all 100 of her shares.(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)
c. Assume that Allison unlevers her shares and re-creates theoriginal capital structure. What is her cash flow now? (Donot round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.)

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FCOJ, Inc., a prominent consumer products firm, is debatingwhether to convert its all-equity capital structure to one that is30 percent debt. Currently, there are 5,800 shares outstanding, andthe price per share is $57. EBIT is expected to remain at $32,000per year forever. The interest rate on new debt is 8 percent, andthere are no taxes. a.Allison, a shareholder of the firm, owns 100 shares of stock.What is her cash flow under the current capital structure, assumingthe firm has a dividend payout rate of 100 percent? (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)b.What will Allison’s cash flow be under the proposed capitalstructure of the firm? Assume she keeps all 100 of her shares.(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)c.Assume that Allison unlevers her shares and re-creates theoriginal capital structure. What is her cash flow now? (Donot round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.)

a.	Allison, a shareholder of the firm, owns 100 shares of stock.What is her cash flow under the current capital structure, assumingthe firm has a dividend payout rate of 100 percent? (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
b.	What will Allison’s cash flow be under the proposed capitalstructure of the firm? Assume she keeps all 100 of her shares.(Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)
c.	Assume that Allison unlevers her shares and re-creates theoriginal capital structure. What is her cash flow now? (Donot round intermediate calculations and round your answer to 2decimal places, e.g., 32.16.)