Problem 1.Capital Structure theorn . Deep End Pools & Share of common stock Supplies has an all- Outstanding = 900,000 common-equity capital structure. Po-$30 per share Some financial data for the company areExpected level of EBIT as follows: Common stock price, - $5,400,000 Dividend payout ration- 100 percent Problem 1.Capital Structure theory In answering the following questions, assume that corporate income not taxed . A. Under present capital structure, what is the total value of the firm B. What is the cost of common equity capital? What is the composite cost of capital? C. Now suppose Deep End sells $1,5 million of long-term debt with an interest rate of 8 percent. The proceeds are used to retire the outstanding common stock. According to the net operating income theory (the independence hypothesis), what will be the firm's cost of common equity after structure change? . . 1. What will be the dividend per share flowing to the firm's common . 2. By what percentage has the dividend per share changed owing to the . 3 By what percentage has the cost of common equity changed owing . 4. What will be the composite cost of capital after the capital structure shareholders? capital structure change? to the capital structure change? change