DH company is unlevered, has an equity beta of 1.25 and unlevered cash flows of $76,800 per annum that will continue in perpetuity. The expected market return is 10% p.a and Treasury bills earn 2% p.a.  DH is currently considering issuing $300,000 in new debt with an 8% interest rate. DH would repurchase $300,000 of its own shares, using the proceeds of the debt issue. There are currently 32,000 shares outstanding and the company's effective marginal tax rate is 34%.

a)      Calculate the company's unlevered cost of equity capital.              

b)      Calculate the value of a share in the company before it announces the capital restructure.          

c)      Assuming the company completes the restructure:

i.     Calculate the value of each share in the company, after the restructuring is complete.          
ii.   Calculate the levered cost of equity capital.                

iii.    Calculate the new WACC.