What is her cash flow under the current capital structure

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Question - FCOK, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 23% debt. Currently there are 7,334 shares outstanding and the price per share is $29.17. EBIT is expected to remain at $58,480 per year forever. The interest rate on new debt is 9.04% and there are no taxes.

Ms. Brown, a shareholder of the firm, owns 122 shares of stock. What is her cash flow under the current capital structure (without the debt), assuming the firm has a dividend payout rate of 100%.

Reference no: EM132929353

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