Question: Finch, Incorporated, is debating whether or not to convert its all-equity capital structure to one that is 30 percent debt. Currently, there are 8,000 shares
Finch, Incorporated, is debating whether or not to convert its all-equity capital structure to one that is 30 percent debt. Currently, there are 8,000 shares outstanding and the price per share is $41. EBIT is expected to remain at $32,000 per year forever. The interest rate on new debt is 5 percent, and there are no taxes. Allison, a shareholder of the firm, owns 300 shares of stock. What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100 percent? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What will Allisons cash flow be under the proposed capital structure of the firm
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