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Equity, Inc. is currently in an all-equity-financed firm. It has 100,000 shares outstanding that sell for $20 each. The firm has an operating income of

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Equity, Inc. is currently in an all-equity-financed firm. It has 100,000 shares outstanding that sell for $20 each. The firm has an operating income of $300,000 and pays no taxes. The firm contemplates a restructuring that would issue $500,000 in 8% debt which will be used to repurchase stock. Show the value of the firm, EPS, and rate of return on the stock before after the proposed restructuring

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