FCOJ, Inc., a prominent consumer products firm, is debating whether or not to convert its all-equity capital structure to one that is 30 percent debt. Currently, there are 6,100 shares outstanding and the price per share is $55. EBIT is expected to remain at $19,500 per year forever. The interest rate on new debt is 8 percent, and there are no taxes.

Required:

(a)	Melanie, a shareholder of the firm, owns 100 shares of stock. What is her cash flow under the current capital structure, assuming the firm has a dividend payout rate of 100 percent? (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g., 32.16).)

Shareholder cash flow

$

(b)	What will Melanie