1. A firm can increase its intrinsic value by increasing their and decreasing thei (2 total points) What happens to the cost of capital (ra & ra) in a firm when additional debt is issued? Why? 4 total points) 2. 3. ABC Inc. is a toy manufacturer with a fixed cost of $250,000. The average price per toy is $20. Each toy has a variable cost of $12.50. What is the quantity break even for ABC Inc.? (4 total points) firm currently has no debt. It has an of 6%. The firm is 4. ABC Inc. is looking at recapitalizing its current structure. The unlevered beta of 1 . The current risk free rate is 5% with a market risk premium enerate free cash flows of $35 million at an expected zero growth rate. The company has no short term investments, no preferred stock, and 10 million shares to recapitalize with a new capital structure of 30% debt firm with a loan at 8%. If the company repurchase stock. The firm's tax %, Based outstanding. If the firm decided and 70% equity, the bank would provide the rate is 40%. Based on this information, what is the firm's weighted recapitalizes, it will use the proceeds from debt issuance to lue of Operations, and price per share after the repurchase? (10 total points)