$1.$ Lion Corp is an all equity firm. The firm's annual EBIT is currently $$10$ million and is expected to remain at that level indefinitely. The current expected return on Lion's stock is $20\%$ and the firm pays corporate tax at the $35\%$ rate.

Calculate the current value of Lion Corp. as an unlevered firm.

$2.$ Suppose that Lion sells $$10$ million in debt and repurchases $$10$ million in equity. The debt they issue will offer a $10\%$ interest rate. Once Lion undertakes this action, they intend to keep this level of debt financing for the foreseeable future. What will be the total market value of Lion Corp. $($debt plus equity$)$ after this change in financial structure is complete?

$3.$ If Lion takes the actions outlined in question $2,$ what will be the expected return on the firm's stock after the change in capital structure?

$4.$ If Lion takes the actions outlined in question $2,$ what will be the firm's weighted average cost of capital after the change in capital structure?

$5.$ National Electric Company $($NEC$)$ is considering acquiring a company at a cost of $$20$ million. Tom Edison, the company's chief financial officer, has evaluated the firm that they are interested in acquiring; he determined that the firm's before$-$tax cash flows will be $$12\mathrm{.}12$ million in perpetuity. The firm's cost of debt is $10$ percent, and its cost of equity is $20$ percent. The firm's target debt$-$equity ratio is $200$ percent. The firm they would like to acquire has the same business risk and will support the same level of debt as NEC. The firm will be taxed at $34$ percent tax.

Using WACC what is the NPV of this aquistion