Suppose you are the CFO of Company ABC which is currently undergoing a corporate restructure. The company is currently financed entirely by common stock, which is comprised of 100,000 shares priced at $100 per share. You are tasked by the CEO to consider the following capital restructures:

• Option A: 100% equity, 0% debt (leave capital structure as is)
• Option B: 50% Equity, 50% debt (repurchase common stock and replace with debt)
• Option C: 30% equity, 70% debt (repurchase common stock and replace with debt)

Part A). Calculate the required return on the company for the three options above. Assume there's a corporate tax of 35% and the expected market return is 12% and the debt yields a risk-free 4%.

Part B). How many shares of common stock would there be under the three different capital structure options?

Part C). If Company ABC reported an operating loss of $500K, what would the new share prices be under the different capital structure options?

Part D). Which capital structure option would you suggest and why? Would your answer change at all if you knew the company has been severely impacted by the COVID-19 pandemic and forecasted revenues have been cut in half?