13.1 EBIT and EPS. Suppose the GNR Corporation has decided in favor of a capital restructuring that involves increasing its existing $5 million in debt to $25 million. The interest rate on the debt is 12 percent and is not expected to change. The firm currently has one million shares outstanding, and the price per share is $40. If the restructuring is expected to increase the ROE, what is the minimum level for EBIT that GNR's management must be expecting? Ignore taxes in your answer. M&M Proposition II (no taxes). The Pro Bono Corporation has a WACC of 20 percent. Its cost of debt is 12 percent. If Pro Bono's debt-equity ratio is 2, what is its cost of equity capital? Ignore taxes in your answer. M&M Proposition I (with corporate taxes). Suppose TransGlobal Co. currently has no debt and its equity is worth $20,000. If the corporate tax rate is 30 percent, what will the value of the firm be if TransGlobal borrows $6,000 and uses the proceeds to buy up stock? 13.2 13.3