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Question 1 - Total 8 marks a) Biden Inc. has decided in favor of a capital structuring that involves increasing its existing $850 million in debt to $1 billion. The interest rate on debt is 11% and is not expected to change. The firm currently has 50 million shares outstanding and the price per share is $15. If the restructuring is expected to increase the ROE, what is the minimum level of EBIT that Biden Inc. management must be expecting? Ignore taxes in your answer. (4 marks) b) A company with the common equity accounts shown below, declares a 27% stock dividend at a time when the market value of its stock is $14 per share. What effects will this have on the equity accounts? Show by re-writing the new balances of these accounts. Common Stock ($1 par value) Capital Surplus Retained Earnings Total Owners' Equity $1,150,000 $2,045,000 $7,800,450 $10,995,450 (4 marks)