Question 5: Consider Al Mazoon dairy, an all-equity firm that is considering going into debt (Maybe some of the original shareholders want to cash out). (1+1+1 = 3 Points) Current structure Proposed Structure Assets Debt 20,000 20,000 0 8,000 Equity 20,000 12,000 Debt/ Equity ratio 0 2/3 Interest rate n/a 8% Shares outstanding 400 240 50 50 Share Price Consider the EBIT of 1000, 2000 and 3000 during recession, normal and expansion periods, respectively. There are no taxes.