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Lemansky Enterprises is considering a change from its current capital structure. The company currently has an all - equity capital structure and is considering a

Lemansky Enterprises is considering a change from its current capital structure. The company currently has an all-equity capital structure and is considering a capital structure with 40 percent debt. There are currently 2,500 shares outstanding at a price per shar of $80. EBIT is expected to remain constant at $23,990. The interest rate on new debt is 10 percent and there are no taxes.
a. Rebecca owns $20,000 worth of stock in the company. If the firm has a 100 percent payout, what is her cash flow?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, 32.16.
b. What would her cash flow be under the new capital structure assuming that she keeps all of her shares?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, 32.16.
c. Suppose the company does convert to the new capital structure. How many shares should Rebecca sell to invest in the firm's ne debt to maintain her current cash flow?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, 32.
\table[[a. Shareholder cash flow,],[b. Shareholder cash flow,],[c. Number of shares stockholder should sell,]]
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