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2. Assume perfect capital market. Roblox is currently an all-equity firm. It generates earnings $10 million EBIT every year forever. All its earnings will be

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2. Assume perfect capital market. Roblox is currently an all-equity firm. It generates earnings $10 million EBIT every year forever. All its earnings will be paid as dividends. Currently, Roblox has 10 million shares outstanding, and its stock is $10 per share. a. What is Roblox' equity cost of capital? Roblox is considering leveraged recapitalization by borrowing $50 million at an interest rate of 5% and using the proceeds to repurchase shares. b. What will be Roblox' equity cost of capital after the leveraged recap? c. How many shares can Roblox repurchase? d. What will be Roblox's earnings per share after the leveraged recap? Roblox called off the leveraged recap. Instead, Roblox will sell additional 10 million shares. e. How much cash can Roblox raise by selling new shares? f. What is the equity cost of capital after selling new shares? g. What will be Roblox's earnings per share after selling new shares

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