Ex-A Consider a firm that is currently all-equity financed. The firm produces a perpetual EBIT of $120m per annum and has an all-equity cost of capital (required return on equity) of 12.22 per cent (0.1222). The corporate tax rate is 30 per cent, and the interest rate on debt is 4.35 per cent (0.0435). What would be the value of the firm if it were to take on and then maintain a level of borrowing of $300m in perpetuity? Ex-B It is often stated that gaining investment capital is "the most expensive form of funding". However, when mathematical models are developed this is not found to be the case. What could be meant by the statement, and is the statement true? Ex-C Provide a brief explanation of arguments that are used to justify the ability of the target firms to support the high levels of additional debt leverage imposed on the firm due to leveraged buy-outs (LBOs). Ex-D Discuss the problems that arise in valuation due to the high debt leverage ratios associated with leveraged buy-outs (LBOs). Ex-E Consider again the firm introduced in Ex-A. What is the implied WACC of the firm following its addition of debt of $300m in perpetuity? Ex-F Consider again the firm introduced in Ex-A and Ex-E. Assume that it is to be acquired under a LBO, under which an initial level of debt of $600m will be taken on, with repayment of $100m per year and interest on the principal at the end of each of years 1, 2, and 3. A level of debt of $300m will then be maintained in perpetuity. Additionally, following the LBO management will be able to extract pre-tax increments to EBIT of $25m per year in perpetuity. Using the APV method, determine the value of the of the firm. You may assume that you can discount any debt-related cash flows at the cost of debt