5. Go-Blue Systems has perpetual cash EBIT = $400 mil per year. Depreciation, change in working capital & net capital spending are zero. Tc = 30%. The asset (unlevered equity) beta = 1.2. The market risk-premium (rm - rf) = 6.5%; risk-free rate (rf) = 3.5%. Go-Blue has $1,000 mil in debt with a cost of debt equal to 8.0%. Must show calculations (23 pts) a. What is the unlevered value (Vu) of Go-Blue? Hint: Find unlevered cost of equity (ru)( b. What is the levered value of Go-Blue and the value of the equity if interest expense is NOT tax deductible? (5 pts) c. What is the required return on Go-Blues levered equity assuming interest expense is NOT tax deductible? (3 pts) For the remaining questions, assume interest expense is tax deductible. d. What is the value of the levered version of Go-Blue and the value of its levered equity? (6 pts) e. What is the return on Go-Blues levered equity? Hint: it should be less than your answer in part (c) (4pts) Parts f & g are Extra Credit (Interest is Tax Deductible) f. What is Go-Blues WACC ? (2 pts) g. Using the WACC from part (f) above, show how you arrived at the total value of the levered firm (VL) in part (d): (3 pts)