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SNC Inc., an unlevered firm, has 1 million shares outstanding,each trading at $25. The firm is thinking of changing its capitalstructure by issuing $10 million of debt at 10% and will use theproceeds to repurchase shares. Assume the bank pays an interestrate of 10%.Assume that SNC Inc. decides to convert to the proposed capitalstructure. Jane, a shareholder of the firm, owns 15,000 shares. Sheprefers the cash flows she was receiving under the all-equitycapital structure. If the EPS of the firm under the proposedcapital structure is $5.50, what will be Jane’s cash flow assumingshe does homemade leverage to achieve the all-equity cash flow?Assume the corporate tax rate is 0%.Answer is $64500 – need an in-depthsolution.Now assume that SNC Inc. faces a corporate tax rate of 40%.What would be the stock price of SNC Inc. after the firm hasannounced the debt issue to the market but before the shares arerepurchased?Answer is $29 – need an in-depth solution.