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1. Tom Scoll is the owner, president, and primary salesperson for Scull Manufacturing, Because of this, the company's profits are driven by the amount of work Tom does. If he works 40 hours each week, the company's EBIT will be $590,000 per year, if he works a 90 hour week, the company's EBIT will be $890,000 per year, The company is currently worth $2.8 million, The company needs a cash infusion of $1.2 million, and it can issue equity or issue debt with an interest rate of 9 percent. Assume there are no corporate taxes. 3. What are the cash flows to Tom under each scenario? (In your computations, round "ownership percentage" to 2 decimal places. Do not round other intermediate calculations. Enter your answers in thousands of dollars, Omit $ sign in your response.) b. Under which form of financing is Tom likely to work harder? 2. Dream Inc. has debt outstanding with a face value of $5,4 million. The value of the firm if it were entirely financed by equity would be $11.5 million. The company also has 224,000 shares of stock outstanding that sell at a price of $38 per share. The corporate tax rate is 35 percent. What is the decrease in the value of the company due to expected bankruptcy costs?' (Do not round Intermediate calculations. Enter the final answer in dollars. Omit $ sign in your response.) 3. Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 percent, and the probability of a recession is 40 percent. It is projected that the company will generate a total cash flow of $226 million in a boom year and $101 million in a recession. The company's required debt payment at the end of the year is $136 milion. The market value of the company's outstanding debt is $107 million. The company pays no boxes. a. What payoff do bondholders expect to receive in the event of a recession? (Do not round Intermediate calculations. Enter the final answer in dollars. Omit $ sign in your response.) b. What is the promised return on the company's debt7 (Do not round intermediate calculations. Found the final answer to 2 decimal places.) C. What is the expected return on the company's debit (Do not round intermediate calculations. Round the final answer to 2 decimal places.) 4. Roll Corp. (RC) currently has 455,000 shares of stock outstanding that sell for 540 per share. Assuming no market importections or tax effects exist Determine the share price and new number of shares outstanding if (Round "Price per share" to 2 decimal places. Round "Shares outstanding" to the nearest whole number. Omit $ sign in your response.] a. RC has a five for three stock split. b. RC has a 15 percent stock dividend. e. RC has a 48.50 percent stock dividend