10.

a. In your answer to Problem 9a, what would happen if Ponza International had a debt-to-total-capitalization ratio of 40 percent and intended to finance each of the projects with 40 percent debt, at a 6 percent after-tax interest cost, and 60 percent equity? (Assume that everything else was the same, with the exception that the proxy companies now have debt ratios corresponding to that of Ponza.)