Question 5 Kelly Lee established the Turkish Carpet Emporium using 100 percent equity financing after several years of hard work, she built the company into a business that is expected to provide $200,000 of free cash flow per year in perpetuity. There are 20,000 shares of common stock outstanding and the company distributes 100% of its cash flows to investors. The beta of the import carpet business in 1.0. Kelly way have the company issue riskless perpetual debt at 5 percent interest, and use the proceeds to repurchase common stock. Company the following table assuming a perfect financial market with an expected rate of return on the market portfolio of 10 percent. (6 marks) $0 $500,000 $1,500,000 Market value of debt Market value of equity Market value of assets Number of shares outstanding Price per share of common stock Cash flow paid as interest Cash flow paid as dividends Dividends per share Debt/equity ratio