A company has a book value of debt of $500,000 and its pretax cost of debt is 10%. The market value of debt is $550,000. The firms beta is 2. The tax rate is 40% for the firm. It has an annual EBIT of $290,000. The required return on T-bills is 1% and the market return is 6%. Assume no cost of financial distress. a) What is the cost of equity of the firm? b) What is the value of the firm? c) What is the WACC of this firm? d) In this M&M world (Case) what is the firm's optimal level of debt? (No calculations required)