Task 2 - Raising Capital (Marks: 20) The Illustrative Company Ltd currently has no debt in its capital structure. The financial director, Ms Dlamini, is considering a restructuring that would involve issuing debt and using the proceeds to buy back some of the shares in issue. The table below presents both the current and proposed capital structures: Table 16.1. Current and Proposed Capital Structures for Illustrative Company Ltd. To investigate the impact of the proposed restricting, Ms Dlamini, has prepared the table below, which compares the firm's current capital structure to the proposed capital structure under three scenarios. The scenarios reflect different assumptions about the firm's PBIT. Under the expected scenario, the PBIT is R1 million. In the recession scenario, PBIT falls to RS00 000. In the expansion scenario, it rises to R1,5 million. (Assume no tax). Table 16.2. CAPITAL STRUCTURE SCENARIOS FOR THE ILLUSTRATIVE COMPANY LTD. Current Capital Structure: No Debt Q The Independent Institute of Education (Pty) Ltd 2022 Page 4 of 5 21;22;23 2025 Calculate the Degree of Financial Leverage for Illustrative Company Ltd, and advise the financial manager of the impact of the proposed changes in the capital structure of the company