Martingale, Inc., is debating whether to convert its all$-$equity capital structure to one that is $30$ percent debt. Currently, there are $7,500$ shares outstanding, and the price per share is $$53.$ EBIT is expected to remain at $$49,000$ per year forever. The interest rate on new debt is $8$ percent, and there are no taxes.

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?

What will Allison$$s cash flow be under the proposed capital structure of the firm? Assume she keeps all $100$ of her shares.

Suppose the company does convert, but Allison prefers the current all$-$equity capital structure. Show how she could unlever her shares of stock to re$-$create the original capital structure.

Using your answer to part $($c$),$ explain why the company$$s choice of capital structure is irrelevant