Question: Finch, Incorporated, is debating whether or not to convert its all - equity capital structure to one that is 2 0 percent debt. Currently, there

Finch, Incorporated, is debating whether or not to convert its all-equity capital structure to one that is 20 percent debt. Currently, there are 6,000 shares outstanding and the price per share is $40. EBIT is expected to remain at $12,000 per year forever. The interest rate on new debt is 7 percent, and there 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, 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.
b. What will Allison's cash flow be under the proposed capital structure of the firm? Assume she keeps all 100 of her shares.
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.
c. Assume that Allison unlevers her shares and re-creates the original capital structure. What is her cash flow now?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.
\table[[a. Cash flow],[b. Cash flow],[c. Cash flow]]
 Finch, Incorporated, is debating whether or not to convert its all-equity

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