1. Flagstaff Flute Co. is currently an all equity firm with total equity of $230 million and 8 million shares outstanding. The firm plans to issue $40 million of 7.8% bonds and use the proceeds to repurchase common stock. Current stock price is $32. Current EBIT is $45 million and the firm's tax rate is 30%. A. Calculate the firm's return on equity and EPS before the bond issue. B. Show the new capital structure after the bond issue. C. Calculate the debt/equity ratio, EPS and return on equity after the bond issue