Capital Structure Analysis

The Rivoli Company has no debt outstanding, and its financial position is given by the following data:

Expected EBIT	$600,000
Growth rate in EBIT, gL	0	%
Cost of equity, rs	10	%
Shares outstanding, no	100,000
Tax rate, T (federal-plus-state)	25	%

Rivoli is considering selling bonds and simultaneously repurchasing some of its stock. If it moves to a capital structure with 30% debt based on market values, its cost of equity, r_s, will increase to 11% to reflect the increased risk. Bonds can be sold at a cost, r_d, of 6%. Based on the new capital structure, what is the new weighted average cost of capital? Round your answer to three decimal places.

___%

What is the levered value of the firm? What is the amount of debt? Do not round intermediate calculations. Round your answers to the nearest dollar.

Levered value of the firm: $___

Debt: $___