Capital Structure Analysis The Rivoli Company has no debt outstanding, and its financial position is given by the following data:

Capital Structure AnalysisThe Rivoli Company has no debt outstanding, and its financial position is given by the following data:$3,000,000 $500,00010% $15 200,000 40%The firm is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, rs, will increase to 11% to reflect the increased risk. Bonds can be sold at a cost, rd, of 7%. Rivoli is a no-growth firm. Hence, all its earnings are paid out as dividends. Earnings are expected to be constant over time. a.