3. Scott Power is an electric utility that operates in a taxless world. It currently has $50 million in EBIT, $200 million in 5 percent coupon rate bonds outstanding, and $400 million in stock outstanding. a. Determine the firm's yearly interest and earnings, and the firm's cost of equity? What is the cost of capital? b. Scott has decided to issue $100 million in stock and use the proceeds to buy back $100 million in bonds. What must the new cost of equity capital be according to Modigliani and Miller? What is the firm's overall cost of capital?