Which of the following statements is correct? a. if corporate tax rates were decreased while other things were held constant, and if the modigliani-miller tax-adjusted tradeoff theory of capital structure were correct, this would tend to cause corporations to decrease their use of debt. b. a change in the personal tax rate should not affect firms' capital structure decisions. c."business risk" is differentiated from "financial risk" by the fact that financial risk reflects only the use of debt, while business risk reflects both the use of debt and such factors as sales variability, cost variability, and operating leverage. d. the optimal capital structure is the one that simultaneously (1) maximizes the price of the firm's stock, (2) minimizes its wacc, and (3) maximizes its eps. e. if changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

Assume today is december 31, 2013. barrington industries expects that its 2014 after-tax operating income [ebit(1 – t)] will be $400 million and its 2014 depreciation expense will be $70 million. barrington's 2014 gross capital expenditures are expected to be $120 million and the change in its net operating working capital for 2014 will be $25 million. the firm's free cash flow is expected to grow at a constant rate of 4.5% annually. assume that its free cash flow occurs at the end of each year. the firm's weighted average cost of capital is 8.6%; the market value of the company's debt is $2.15 billion; and the company has 180 million shares of common stock outstanding. the firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. using the corporate valuation model, what should be the company's stock price today (december 31, 2013)? round your answer to the nearest cent. do not round intermediate calculations.

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