$5$ points$)$ Intelligent Farm Machineries, Inc. $($NYSE: IFM$)$ has a total market value of $$100$ million, consisting of $$50$ million of common equity and $$50$ million of $10\%$ coupon bonds now selling at par, i$.$e$.,$ YTM $=10\%.$ IFM$$s EBIT is $$10$ million, and its tax rate is $20\%.$ The company can change its capital structure by either increasing its debt to $60\%($based on market value$)$ or decreasing it to $40\%.$ If it decides to increase its use of financial leverage, it must call its old bonds and issue new ones with a $14\%$ coupon. If it decides to decrease its leverage, it will call its old bonds and replace them with new $6\%$ coupon bonds. The firm will sell or repurchase stock at the new equilibrium price to complete the capital structure change. The firm pays out all earnings as dividends; hence its stock is a zero$-$growth stock. Its current cost of equity, rs$,$ is $16\%.$ If it increases leverage, rs will be $20\%.$ If it decreases leverage, rs will be $12\%.$ Answer the following questions based on the assumptions:

$1.$ Assume that the firm can sell new bonds at par regardless of its leverage ratios.

$2.$ No required investment in operating capital is needed. Hence,

FCF $=$ NOPAT $=$ EBIT $(1$ T$).$

$3.$ Assume that the constant growth valuation formula with the growth rate $=0$ is appropriate and the value of nonoperating assets is zero.

Questions $($Show all work$)$:

$($a$)$ What is the firm$$s WACC and total corporate value under the current capital structure? $($b$)$ What is the firm$$s WACC and total corporate value under the $60\%$ debt ratio? $($c$)$ What is the firm$$s WACC and total corporate value under the $40\%$ debt ratio?