Bruno's Is Considering a Change from Its Current Capital Structure

question 47

Multiple Choice

Bruno's is considering a change from its current capital structure.Bruno's currently has an all-equity capital structure and is considering a capital structure with 30 percent debt.There are currently 6,500 shares outstanding at a price per share of $46.EBIT is expected to remain constant at $43,000.The interest rate on new debt is 8.5 percent and there are no taxes.Tracie owns $20,700 worth of stock in the company.The firm has a 100 percent payout.What would Tracie's cash flow be under the new capital structure assuming that she keeps all of her shares?

• A)$1,998
• B)$2,227
• C)$2,815
• D)$3,027
• E)$3,499

---

Definitions:

Complementary Hue

Colors directly opposite each other on the color wheel, which when combined in the right proportions, produce a neutral color like white or grey.

Unique Blue

A distinctive or particular shade of blue that is not common or easily replicated, indicating singularity or rarity.

Saturation Level

Saturation level refers to the maximum extent to which something can be absorbed or filled, commonly used in contexts like color intensity in images or the concentration of a solution.

Brightness Contrast

The effect of surrounding brightness levels on the perception of the brightness of an object, where the same object may appear different under different lighting conditions.