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Corporate Finance: **Kindly provide workings and clear answers. Question 6: Structure Company, an all-equity firm, has 40 million shares outstanding. Its shares' par value is

Corporate Finance: **Kindly provide workings and clear answers.
Question 6:
Structure Company, an all-equity firm, has 40 million shares outstanding.
Its shares' par value is RM1 each.
Structure's shares are currently trading at RM5.
Structure issued a press statement saying that it plans to borrow RM40 million and use the proceeds to repurchase its shares.
Answer the following questions:
(i) Show Structure's current equity and debts components, both in term of RM amounts and percentages.
(ii) Show Structure's equity and debts components, both in terms of RM amounts and percentages, after it borrows to repurchase its shares.
(iii) Suppose Structure pays corporate taxes of 30% and that shareholders expect the change in debts to be permanent.
Assuming that capital markets are perfect except for the existence of corporate taxes, what would be the share price after this announcement?
(iv) Suppose capital markets are perfect except for the existence of corporate taxes and financial costs.
If the share price now moves to RM5.10 per share following the announcement, then what would be the present value of Structure's financial distress costs?

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