12. Consider a firm with the following perpetual cash flows:

EBIT 3,000

Tc 34%

Debt 7,500

Rd 8%

Ru 18%

a. What is the value of the value of the firm if it had no debt?

b. What is the value of the firm with debt? What is the value of equity?

c. Find Re and the weighted average cost of capital

d. Find the value of equity by discounting equity's cash flows at equity's cost of capital.

e. Find the value of the firm by discounting the firm's cash flows by WACC.