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QUESTIONI: PennyJC is considering issuing $10,000,000 worth of perpetual bonds yielding 600,000 interest per year. PennyJC currently has no debt outstanding and will use the bond proceeds to repurchase equity. PennyJC has 100% dividend payout ratio and EBIT is $2,000,000 per year forever. Corporate tax rate is 40% a. If the personal tax rate is 28%, which plan (all equity or debt + equity) offers the investors the highest cash flows? Why? b. If the shareholders require a 10% return before personal taxes, what is the value of the firm under cach plan? (Do not ignore personal taxes). c. Suppose T.-20% and To=32%. What are the investors' cash flows under each plan? Repeat part (b). need answers for question B and C QUESTIONI: PennyJC is considering issuing $10,000,000 worth of perpetual bonds yielding 600,000 interest per year. PennyJC currently has no debt outstanding and will use the bond proceeds to repurchase equity. PennyJC has 100% dividend payout ratio and EBIT is $2,000,000 per year forever. Corporate tax rate is 40% a. If the personal tax rate is 28%, which plan (all equity or debt + equity) offers the investors the highest cash flows? Why? b. If the shareholders require a 10% return before personal taxes, what is the value of the firm under cach plan? (Do not ignore personal taxes). c. Suppose T.-20% and To=32%. What are the investors' cash flows under each plan? Repeat part (b). need answers for question B and C

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