Question is below, full question in the attachment. Please answer a-e.

Kemper Company'sbalance sheet and income statement are shown below (in millions of dollars). The company and its creditors have agreed upon a voluntary reorganization plan. In this plan, each share of the $5 preferred will be exchanged for one share of $1.00 preferred with a par value of $25 plus one 9% subordinated income debenture with a par value of $75. The $9 preferred issue will be retired with cash. The company's tax rate is 30 percent.

Name: Allison Hippisley Final Examination FINC 5880 Session 9 Question 5. (20 points) Kemper Company's balance sheet and income statement are shown below (in millions of do and its creditors have agreed upon a voluntary reorganization plan. In this plan, each share of the $5 preferred wil share of $1.00 preferred with a par value of $25 plus one 9% subordinated income debenture with a par value of $7 issue will be retired with cash. The company's tax rate is 30 percent. Current Assets Net fixed assets Balance Sheet prior to Reorganization (in millions 400 450 Total assets 850 a. Construct the pro forma balance sheet after reorganization takes place. Show the new preferred at its par value. b. Construct the pro forma income statement after reorganization takes place. How does the recapitalization affect ne stockholders? Income Statement (in millions) Net sales Prior to Reorganization 900.0 Operating expense Net operating income Other income 725.0 175.0 7.0 EBT Taxes Net income Dividends on $5 PS Dividends on $8 PS Income to Common SHs 182.0 54.6 127.4 5.0 #REF! #REF! 30% Increased income available to common SHs with reorganization: c. Calculate the required pre-tax earnings to cover debt and preferred stock obligations, before and after the recapita d. Calculate the debt ratio before and after the reorganization? e. Would the common stockholders be in favor of the reorganization? Explain your answer, providing at least 2 reasons Final Examination FINC 5880 Session 9 eet and income statement are shown below (in millions of dollars). The company zation plan. In this plan, each share of the $5 preferred will be exchanged for one 9% subordinated income debenture with a par value of $75. The $9 preferred s 30 percent. Sheet prior to Reorganization (in millions Current liabilities Advance payments $5 preferred stock, $100 par value (1,000,000) shares $9 preferred stock, no par, callable at 100 (160,000 shares) Common stock, $0.10 par value (10,000,000) shares Retained earnings Total claims 350 20 100 30 50 300 850 tion takes place. Show the new preferred at its par value. anization takes place. How does the recapitalization affect net income available to common e Statement (in millions) After Reorganization and preferred stock obligations, before and after the recapitalization? ganization? Explain your answer, providing at least 2 reasons for it