The Rivoli Company has no debt outstanding, and its financial position is given by the rollowing data Assets (Market value$3,000,000 book value) EBIT Cost of equity, rs Stock price, Po Shares outstanding, no Tax rate, T (federal-plus- state) T e firm is considering selling bands and simultaneously repurchasing some of its stock fit moves a capital structure with 30% debt based on market value, its cost of equity, r sold at a cost, rd of 6%. Rivoli is a no-growth firm. Hence, all its earnings are paid out as dividends. Earnings are expected to be constant over time. a. What effect would this use of leverage have on the value of the firm? S500,000 10% $15 200,000 40% will increase a 129 o reflect he increased risk. Bonds can be Increasing the financiel leverage by adding debt results in an increase in the firm's value. II. Increasing the financial everage adding debt results in decrease in the firm's value. III. Increasing the financial leverage by adding debt has no offect on the firm's valuc. b. What would be the pricc of Rivoli's stock? Do not round intermediate calculations, Round your answer to the nearest cent. per share c What happens to the firm's earnings per share after the recapitalizatian? Do nat round intermediae cakculations. Round your answer to the nearest cent. The firm-Select- d. The $500,000 EBIT given previously is actually the expected value from the following probability distribution: Probability 0.10 0.20 0.40 0.20 0.10 EBIT (s 105,000) 250,000 350,000 800,000 1,505,000 Determine the times-interest-earned ratio for each probability. Use minus sign to enter negative values, if ny. Do not round intermediate calculations. Round your answers to two decimal places. Probability 0.10 0.20 0.40 0.20 0.10 TIE What is the probability of not covering the interest payment at the 30% debt level? Do not round intermediate calculations. Round your answer to two dearmal places