CePina Company currently does not use any debt at all (it is an all-equity firm). The firm has 3,000,000 shares selling for $43 per share. Its beta is 1.2, and the current risk-free rate is 4.20%. The market risk premium for the coming year is 8.4%. CePina Company will sell $43,000,000 in corporate bonds with a $1,000 par value. The bonds have a yield to maturity of 9%. When the bonds are sold, the beta of the company will increase to 1.5. CePina will use the entire proceeds of the bond sale to repurchase an equal dollar amount of its equity (buyback shares). The corporate tax rate is 15%.

1. What is the WACC of CePina Company before the bond sale?

2. What is the market value of debt after the bond sale?

3. What is the market value of equity after the bond sale?

4. What is the weight for equity in the capital structure (the value D/V) - used to compute the WACC?

5. What is the cost of debt after the bond sale?

6. What is the cost of equity after the bond sale?

7. What is the adjusted WACC of CePina Company after the bond sale?