Pettit Printing Company has a total market value of $$100$ million, consisting of $1$ million shares selling for $$50$ per share and $$50$ million of $10\%$ perpetual bonds now selling at par. The company's EBIT is $$11\mathrm{.}69$ million, and its tax rate is $40\%.$ Pettit can change its capital structure by either increasing its debt to $65\%($based on market values$)$ or decreasing it to $35\%.$ If it decides to increase its use of leverage, it must call its old bonds and issue new ones with a $12\%$ coupon. If it decides to decrease its leverage, it will call its old bonds and replace them with new $9\%$ coupon bonds. The company will sell or repurchase stock at the new equilibrium price to complete the capital structure change.