a. 24. ABC Inc. has no debt, a WACC of 10% and a FCF of $15 million that is assumed to be constant. The firm decides to recapitalize with 30% debt in the capital structure which will result in a lower WACC of 9%. If it currently has 10 mil. shares outstanding, how many shares will be outstanding after the recapitalization? 7 million b. 7.5 million c. 8 million d. 8.5 million 9 million e. 25. Which of the following is NOT consistent with empirical and theoretical models of capital structure? a. If there are no taxes, bankruptcy cost, and investors and managers have equal knowledge, then leverage has no impact on firm value. b. Firms with good future prospects not known to investors should use new equity instead of debt to finance proiects. 7 c. Technology companies that have more special purpose assets use less debt than those with lots of readily collaterizable assets e.g., real estate firms. d. Firms with high operating leverage use less debt. Debt can reduce the moral hazards of manager misbehavior but may induce underinvestment in worthwhile projects. e