1. Brownson Corp. has a current debt to equity of 3. What percentage of the capital structure is equity?

2. If Brownson Corps total capital structure is $1,079,888, how much is equity? How much is debt?

3. If Brownson Corp. wants to change their debt to equity to 1, would they have to pay off their debt or borrow more debt?

4. If they did get their debt to equity to 1, how much would be debt in $? How much in equity?

5. Suppose the BDJ Corporation has decided in favor of a capital restructuring that involves increasing its existing $80 million in debt to $125 million. The interest rate on the debt is 9 percent and is not expected to change. The firm currently has 10 million shares outstanding, and the price per share is $4 If the restructuring is expected to increase the ROE, what is the minimum level for EBIT that BDJs management must be expecting? Ignore taxes for this problem.

6. BDJ has forecasted an EBIT of $50M. They use a standard formula of 15% expansion and 15% recession when forecasting. Calculate both using the above capital structures for these forecasts to get the EPS.