Given the following information for Houston company, answer questions 12 to 20 below: 5 points 16. Assuming that Mr. Joseph and Mr. Thomas didn't purchase any new stock, what would be their ownership percentage under option 1 respectively?* 18. What is the firm's current Earning per share?* 5 points O $0.25 Houston is a family firm that is specialized in providing marketing services. It has 500,000 shares outstanding. Mr. Joseph Houston owns 200,000 shares, his brother Mr. Thomas Houston owns 180,000, and the remaining shares are owned by other non- family members. O 36%; 37.74% O $0.30 O 37.74%; 34.35% O $0.23 Houston company has a bank loan of $300,000 carrying an interest rate of 10%. 0 38.17%; 30.21% O $0.33 0 37.74%; 33.96% The CFO has suggested to raise $600,000 in capital in order to pay back the loan and use the remaining funds for other investments. He suggested the following two options: O None of the above O None of the above 1. Selling of common stocks at $20. 2. Selling of convertible bonds at 10% coupon each at $1,000, convertible into 40 shares of common stocks. Conversion price is $25 17. Assuming that EBIT will be equal to 10% of total assets, what will be the 5 points firm's interest expenses under option 2 (after conversion)?* 19. If the firm chooses option 2. by how much would its EPS change (after 5 points conversion)? The following are extracts of Houston's latest financial statements in 31/12/2019: Balance Sheet of Houston Company (31/12/2019) O $30,000 O $0.07 Assets Liabilities and Equity O $25,000 0 $0.03) Current liabilities $500,000 O $10,000 O $0.02 OSO O $0.05 Common stock (par $2) $1,000,000 O None of the above O None of the above Undivided profits $450.000 Total assets $1,950,000 Total liabilities and equity $1,950,000 20. What will be the change in debt ratio if the firm chooses option 2 (after 5 points conversion)? * Income Statement of Houston Company (31/12/2019) 0 16.75% EBIT $195.000 O (16.75%) Interest expenses $30,000 O 8.89% EBT $165,000 O 10.14% O None of the above Taxes (30%) $49,500 Net income $115,500