Checkers Metals Limited (CML) produces a wide range of steel-based heavy duty products. It is currently all-equity financed with 50 million shares in issue trading at 1.50 each. Following the market recovery in the post-Covid era, it is looking to increase its value and make the most of its growth potential by raising further capital through a debt issue. Its forecasted earning before taxes are 25 million. To tap the growth opportunities, CML needs an extra 30 million financing, however it feels that it could borrow 45 million by issuing risk-free debt. The additional 15 million raised through the debt issue could be used by CML to buy back some of its issued shares. CMLs corporate tax rate is 18 per cent. Required (show all calculations and clearly state any assumptions that you make): i. Calculate the earnings per share for CML before and after the debt issue. How can you explain the change in earnings per share before and after the debt issue? ii. What is the cost of equity and cost of capital of CML before the debt issue? iii. Calculate the total value of CML after the debt issue and leverage recapitalisation. iv. Calculate the value of its equity after leverage recapitalisation. v. What should be the price of each share after leverage recapitalisation? vi. How many shares would be bought and left outstanding after the leverage recapitalisation? Show that the value of equity using the share price in part (v) and the outstanding shares after the leverage recapitalisation is the same as the value of equity in part (iv). vii. Determine CMLs cost of equity after the debt issue and leverage recapitalisation. viii. Determine CMLs cost of capital after the debt issue and leverage recapitalisation.