A. Zippy Pasta Corporation (ZPC) has a constant growth rate of 7 percent. The company retains 30 percent of its earnings to fund future growth. ZPC's expected EPS (EPS1) and ks for various capital structures are given below. Debt/Total Assets (%) Expected EPS (RM) $2.50 3.00 ks (%) 15.0% 20% 30 15.5 40 3.25 16.0 50 3.75 17.0 70 4.00 18.0 Required: What is the optimal capital structure for ZPC? Show all of your working and explain your answer. (Hints: Capital structure is at the optimum level when WACC is at the lowest; hence ZPC stock price is at the highest - to apply DCF method here) (10 marks) B. Gagah Motors Enterprise., a producer of turbine generators, is in this situation: EBIT = RM4 million, tax rate = T = 35%, debt outstanding = D = RM2 million, rd = 10%, rs = 15%, shares of stock outstanding = No = 600,000, and book value per share = RM10. Because Gagah's product market is stable and the company expects no growth, all earnings are paid out as dividends. The debt consists of perpetual bonds. Required: (i). What are Gagah's earning per share (EPS) and its price per share (Po)? (5 marks) (ii). What is Gagah's weighted average cost of capital (WACC)