Sport L&K Company produces annual cash flows of $877 dollars and is expected to exist forever. The company is currently financed with 71 percent equity. Your analysis tells you that the appropriate discount rates are 12.85 percent for the cash flows, and 6.87 percent for the debt. You currently own 7 percent of the shares.

Sport L&K wishes to change its capital structure from 71 percent to 58 percent equity and use the debt proceeds to pay a special dividend to shareholders. How much will it have to pay in interest after the restructuring assuming that the cost of debt is constant?

Assume that all conditions identified by the M&M Proposition 1 apply.

Round the answer to two decimals. Please enter the answer in thousands.

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