The value of the all equity firm that you own 100% of is 120m. You are thinking of partly cashing out and want to choose a capital structure that maximizes the value of the firm. You are given the tax rate of 25% and b = 0.20. All money raised is distributed as dividends. You are thinking of two possible capital structures. A three year coupon bond with face value 100 and coupons 5% of face value in periods 1 and 2, or a three year coupon bond with face value of 100 and coupons in periods 1 and 2 of 10% of face value. Compare the two capital structures and then argue which one is better. You are given the volatility of the assets is 0.40, q = 0.04, the risk free rate is 0.07 per year continuously compounded.