BAT Tony Ltd is an established company that expects its current earnings before interest tax (EBIT) of $2,500,000 per annum to be maintained indefinitely. The company tax rate is 40%. Tony Ltd currently has no debt, and its cost of equity is 15%. 40%. Tony Required: 33E 1:09:00-09-99 a. What is the value of Tony Ltd? [1 mark] b. Tony Ltd is considering borrowing $15,000,000 and using the proceeds to repurchase shares. Assume it can borrow at an interest rate of 11% per annum. What will be the value of equity of the levered firm? [2 marks] 0:0 0:0 0:00: c. According to the trade-off theory, briefly explain how the capital structure of a firm is determined? [2 marks] 14804804SOO 20 ORO URUT A B I U x E X2 1 lill !!! III 14 M JRODAOT ABC