Capital Structure Analysis Pettit Printing Company has a total market value of $100 million, consisting of 1 milion shares selling for $50 per share and $50 milon of 10 % perpetual bonds now seling at par. The company's EBIT is $11.70 milion, and its tax rate is 30 % . Pettit can change its capital structure by either increasing its debt to 70 % (based on market values) or decreasing it to 30%. If it decides to increase its use of leverage, it must cal its. old bonds and issue new ones with a 11 % coupon. If it decides to decrease its leverage, it will call its old bonds and replace them with new 7 % coupon bonds. The company will sell or repurchase stock equilibrium price to complete the capital structure change. the new The firm pays out all earnings as dividends; hence, its stock is a zero growth stock. Its current cost of equity, rs, is 14% t increases leverage, rs will be 16%. IR decreases leverage, rs will be 13 % Present situation (50 % debt): What is the firm's WACC? Do not round intermediate calculations. Round your answer to three decimal places. What is the total corporate value? Enter your answers in milions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places million 70% debt What is the firm's WACC? Do not round intermediate calculations. Round your answer to two decimal places. % What is the total corporate value? Enter your answers in milions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places milion 30% debt: What is the firm's WACC? Do not round intermediate calculations. Round your answer to two decimal places What is the total corporate value? Enter your answers in milions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places. $ million eBook Problem Walk-Through Capital Structure Analysis Pettit Printing Company has a total market value of $100 million, consisting of 1 million shares selling for $50 per share and $50 million of 10 % perpetual bonds now seling at par. The company's EBIT is $11.70 milion, and its tax rate is 30% . Pettit can change its capital structure by either increasingg its debt to 70% ( based on market values) or decreasing it to 30%. If it decides to increase its use of leverage, it must call its old bonds and issue new ones with a 11% coupon. If it decides to decrease its leverage, it will call its old bonds and replace them with new 7% coupon bonds. The company will sell or repurchase stock at the new equilibrium price to complete the capital structure change. The firm pays out all earnings as dividends; hence, its stock is a zero growth stock. Its current cost of equity, rs, is 14%. If it increases leverage, rs will be 16%. If it decreases leverage, rs will be 13 %. Present situation (50% debt): What is the firm's WACC? Do not round intermediate calculations. Round your answer to three decimal places What is the total corporate value? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to three decimal places million 70% debt: What is the firm's WACC? Do not round intermediate calculations. Round your answer to two decimal places % What is the total corporate value? Enter your answers in milions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate caloulations. Round your answer to three decimal places milion 30% debt: What is the firm's WACC? Do not round intermediate calculations. Round your answer to two decimal places % What is the total corporate value? Enter your answers in milions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate caloulations. Round your answer to three decimal places milion