Question: 1 - Big it Corp. is debating whether to convert its all - equity capital structure to one that is 3 5 % debt. Currently,

1- Big it Corp. is debating whether to convert its all-equity capital structure to one that is 35% debt. Currently, there are 100 shares outstanding, and the price per share is $54. expected to remain at $35.500 per year forever. The interest rate on new debt is 4%, and there are no taxes. (a) Mike Tyson, a shareholder of the firm, owns 150 shares of stock. What is his cash flow under the current capital structure? assuming the firm has a dividend payout rate of 100%?5 pts (b) What will Tyson's cash flow be under the proposed capital structure of the firm? Assume he keeps all 100 of his shares. 5 pts

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