1) Sam Scurry bought several hundred shares of annable.com at a price of $41.35 about 5 years ago that sell for $68.40 per share today. Sam pays capital gains tax at the rate of 17%, and pays tax on dividends at the rate of 31%. Suppose that annable.com elects not to pay a dividend this year, and that Sam sells 24 shares of stock. How much of the total amount of proceeds from the sale will Sam get to keep? $ ___________ (PLEASE SHOW CALCULATIONS)

Place your answer in dollars and cents without a comma or dollar sign. It is best to work your analysis out using at least four decimal places of accuracy. That is, allow your tax on capital gain per share to go beyond the second decimal place.

2) Santos Unlimited (SU) was originally unlevered with 4900 shares outstanding. However, after a major financial restructure, SU now has $39000 of debt, with an annual interest expense of 12 percent. The restructuring has reduced the number of shares to 3300. A group of shareholders of SU are not convinced that this move towards adopting financial leverage is a good idea. Their main argument is that there is now some range of EBIT, however low, that will make the shareholders worse off than before. Help understand the situation better by computing the level of earnings before interest and tax (EBIT) that would make shareholders indifferent between being unlevered (i.e. not having any debt) and levered (i.e. having debt). Assume a 33 percent corporate tax rate. Answer: $ _______ (PLEASE SHOW CALCULATIONS) Place your answer to the nearest dollar without a dollar sign or a comma (if applicable).