Please answer question $2$ again. With proper answer as studied in Malaysian education standard.

Question $2$

Based on the current capitalization, Roce Sdn Bhd $($RSB$)$ has made the following forecast for the

coming year:

The company has RM$20,000,000$ worth of debt outstanding and all of its debt yields $6\%.$ The

company's tax rate is $30\%.$ The company's price earnings $($P$/$E$)$ ratio has traditionally been $8$ x $.$

The company's investment bankers have suggested that the company recapitalize. Their suggestion is to have an additional amount of debt by issuing enough new bonds at a yield of $6\%$ to repurchase $1,400,000$ shares of common stock.

Assume that the repurchase will have no effect on the company's operating income; however, the repurchase will increase the company's dollar interest expense. Also, assume that as a result of the increased financial risk, the company's price earnings $($P$/$E$)$ ratio will be $8x$ after the

repurchase.

What would be the expected year$-$end stock price if the company proceeded with the

recapitalization? Should RSB proceed with the recapitalization?