ettit 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 selling at par. The company's EBIT is $12.64 million, and its tax rate is 35%. Pettit can change its capital structure either by increasing its debt to 55% (based on market values) or decreasing it to 45%. If it decides to increase its use of leverage, it must call its old bonds and issue new ones with a 14% coupon. If it decides to decrease its leverage, it will call in its old bonds and replace them with new 9% coupon bonds. The company will sell or repurchase stock at the new equilibrium price to complete the capital structure change.

Capital Structure Analysis Pettit Printing Company has a total market value or $100 million, consisting or 1 million shares selling for $50 per share and $50 million or 10% perpetual bonds now selling at par. The company's EBIT is $12.64 million, and its tax rate is 35%. Pettit can change its capital structure either by increasing its debt to 55% based on market values or decreasing t to 45% f t decides to increase s use of everage, t must a so o and issue new ones with a 14% coupon f t decides to decrease its everage, t will cal in its old bonds and replace hem with new 9% coupon bonds. The compan" l sell or repurchase stock at the new equilibrium teto complete the capital structure change. The firm pays out all earnings as dividends; hence, its stock is a zero growth stock its cu ent cost or equity is 14% r t ncreases leverage l's l be 5% t decreases i vera e, w e Present situation (50% debt) What is the firm's WACC? Round your answer to three decimal places. What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. million 55% debt: What is the firm's WACC? Round your answer to two decimal places. what is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 12, not 1,200,000. Round your answer to three decimal places million 45% debt: What is the firm's WACC? Round your answer to two decimal places. What is the total corporate value? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to three decimal places. million