1) Assume a perfectly competitive market with no corporate or personal taxes. Companies A and B each earn gross profits of P and differ only in their capital structure-A is wholly equity-financed, and B has debt outstanding on which it pays a certain $100 of interest each year. Mr. Schultz purchases 10 percent of equity of A. What profits does Mr. Schultz obtain? a. 10%P+10% Interests b. 10% Interests c. 10%P d. 10%$100 2) (Continuation) What alternative strategy would provide the same result? a. Purchase 10% of Bs equity and 10% of Bs debt. b. Purchase 10% of Bs equity. c. Purchase 10% of Bs debt d. Purchase 10% of A s debt 3) (Continuation) Suppose Mr. Schneider purchases 10 percent of equity of B. What profits does he obtain? a. 10%P b. 10%$100 c. 10%P$100 d. 10%(P$100) 4) (Continuation) What alternative strategy would provide the same result? a. Borrow an amount equivalent to 10% of Bs debt and invest the money in 10%B s stocks. b. Borrow an amount equivalent to 10% of BS debt and invest the money in 10%A s stocks. c. Purchase 10% of BS equity and 10% of B s debt. d. Invest in 10% in As stocks