Assume that you have just been hired as business manager STS$.$ The Cost of Debt of STS with Different Capital Structures is shown in the table below

Percent Financed with Debt $($wd$)$ Cost of Debt $($rd$)$

$0\%8\mathrm{.}0\%$

$10\%8\mathrm{.}0\%$

$20\%8\mathrm{.}1\%$

$30\%8\mathrm{.}5\%$

$40\%9\mathrm{.}0\%$

$50\%11\mathrm{.}0\%$

$60\%14\mathrm{.}0\%$

The risk$-$free rate of return, rRF$,$ is $6\%,$ and the market risk premium, MRP$,$ is $6\%.$ Calculate the optimum capital Structure of STS$.$ If we assume that the unlevered Beta of STS $=1,$ calculate the cost of capital corresponding to recapitalization with the different debt levels above.

Input Value

Unlevered Beta of STS $1$

Risk$-$free rate $($rRF$)6\%$

Market risk premium $($MRP$)6\%$

Expected EBIT $$40,000$

Tax rate $40\%$

outstanding shares $10,000$

STS has an expected EBIT of $$40,000.$ It pays all its income in dividends.

Estimate the firm$$s value for each debt level.

Also find the stock price for each debt level and EPS at each level.

Present all your answers in a fully formulated Excel sheet with input and output sections. All calculations should be linked.