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PROBLEM 2 (9 points: 3 points for each part) a) What will be the share price after the firm changes its capital structure? b) Suppose
PROBLEM 2 (9 points: 3 points for each part) a) What will be the share price after the firm changes its capital structure? b) Suppose you are holding 100 shares bought at $80 per share just before the firm changes its capital structure. How much capital gain tax will you pay by selling your 100 shares just after the firm's change its capital structure. Assume that the capital gain will be taxed at half of the 40% corporate tax rate?
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