Ali Baba & Co. is a small company engaged in the hospitality industry. The cost of debt capital is 10%; EBIT is $150; the amount of debt is $500; the cost of unlevered debt is 20%; and the tax rate is 34%.

a. Calculate the value of Ali Baba & Cos equity. (show your calculations in detail)

b. Calculate the cost of equity capital for Ali Baba & Co.

c. Calculate the WACC for Ali Baba & Co.

d. What do you conclude?