Southern Wind is an all-equity firm with 26,500 shares of stock
outstanding and a total market value of $376,000. Based on its
current capital structure, the firm is expected to have earnings
before interest and taxes of $38,000 if the economy is normal,
$23,600 if the economy is in a recession, and $52,400 is the
economy booms. Ignore taxes. Management is considering issuing
$95,200 of debt with an interest rate of 6 percent, if the firm
issues the debt, the...