A company has recent net income of Rs.5 million which is expected to grow at a constant rate of 5%. Company has a 40% dividend payout ratio. The company has Rs.25 million in total assets and zero debt in its capital structure. Equity of the company is divided into 400,000 shares. Cost of the equity of the firm is 13.4%. The company falls in 40% tax bracket. a. Find companys current price per share? In the last meeting of the company, it has been decided to introduce debt in its capital structure. For this, debt of Rs.10 million will be issued and this amount will be used to repurchase stock. It has been estimated that after this recapitalization, cost of debt will be 10% and cost of equity will rise to 15%. b. If the company maintains the same payout ratio, what will be its stock price following the recapitalization? c. Consider other things same, if the company decides to issue Rs.15 million debt and use the proceeds to repurchase stock, what will be the stock price following the recapitalization? Pretax cost of debt will be 12%, and cost of equity will be 17% in this case.