(9). Prince Corp. has no debt but can borrow at a rate of 5 percent if it does decide to issue debt. Currently the firm has a cost of equity of 8 percent and faces a corporate tax rate of 40 percent. Prince expects its EBIT to be $100,000 every year forever.

a. What is the market value of Prince Corp today?

b. What would the market value of Prince Corp be if it replaced $200,000 of equity financing with debt financing?

c. What would Prince Corp.'s cost of equity be if it changed its capital structure to 20 percent debt and 80 percent equity?

ANSWER: pls expain how to get these answers

. $750,000

3b. $830,000

3. 0.0845 = 8.45%