$2.$ Homemade leverage $($S$16-2)$ Companies A and B differ only in their capital structure. A is financed $30\%$ debt and $70\%$ equity; B is financed $10\%$ debt and $90\%$ equity. The debt of both companies is risk$-$free.

a$.$ Rosencrantz owns $1\%$ of the common stock of A$.$ What other investment package would produce identical cash flows for Rosencrantz?

b$.$ Guildenstern owns $2\%$ of the common stock of B$.$ What other investment package would produce identical cash flows for Guildenstern?

c$.$ ShowthatneitherRosencrantznorGuildensternwouldinvestinthecommonstockofBif the total value of company A were less than that of B$.$