This information applies to the following set of questions. Steady State Inc. (SSI) is a profitable company that has stayed the same size for the past few years (as measured by its Balance Sheets, Income Statements and Cash Flow Statements). You expect SSI to maintain this steady-state condition into perpetuity, except for possible changes to its capital structure. This simple firm has no accruals, no PPE or etc, so for any given year its NI = FCF to owners. The firm is debt free. Given the below data, find (as requested) SSI's optimum WACC, rE, rD and D/(D+E) ratio. Choose among the three cases listed. Annual Income Statement $MM UON Notes Revenue $193.60 - SGA ($154.88) -Interest $0.00 Company is debt free. =EBT $38.72 - Tax ($17.42) = NI $21.30 = FCFE $21.30 FCF = NI because of no accruals, PPE, etc. Rates and other constants RF 4.00% I'M 7.00% Bu 1.10 Trate 45.00%Variable Ratios and Rates Case 1 2 3 D / (D + E) = WD 0.0% 45.00% 80.0% D 0.00% 7.50% 14.00% rE 9.00% 11.00% 18.00% Question 1 1 pts What is the firm's WACC for Case 1? Report your answer to three decimal places. Question 2 1 pts What is the firm's WACC for Case 2? Report your answer to three decimal places.Question 3 1 pts What is the firm's WACC for Case 3? Report your answer to three decimal places. Question 4 1 pts Which case corresponds to the optimal WACC? O Case 3 O Case 1 O Case 2 Question 6 1pts Why does minimum WACC correspond to an entity's optimum leverage for all stakeholders? Choose the single best answer. O Minimum WACC minimizes the project's negative cash flows. O Minimum WACC drives down the present value of negative cash flows O Minimum WACC corresponds to an optimal liquidity ratio O Minimum WACC maximizes the present value of each future cash flow. This new information, and the previously-provided info, applies to all the remaining questions. SSl is for sale for the price shown below (for 100% of the firm's stock). Your Debt/Equity team would like to buy the firm and improve its capital structure. As part of the purchase transaction, your team will optimize SSI's capital structure for all stakeholders. 100% of the stock will be purchased by a) some of the equity team's cash, and b) a loan made by the debt team to SS| on the purchase date. Purchase price of firm's equity (100% of the firm's stock): $200.00 MM The exisiting owners will be paid some of this amount from the equity members of your team. The existing owners will be paid the rest by SSl itself, using the proceeds of the loan made to SSI by the debt members of your team. Question 7 1r Based on your above analysis, what is the D/(D+E) ratio that you will set for the firm? O 15% O 55% O 35% O 45% O 60% O 9% O 20% O 75% Question 8 1 pts How much of the equity team's cash will be used to fund the purchase? Report your answer to one decimal place. Question 9 1 pts How large is the loan that SSI will take out from the debt team members to fund the rest of the purchase? Report your answer to one decimal place