Falcon Windows earns $1 million in annual EBIT in perpetuity on its $5million in assets. After making repairs to assets to exactly offset depreciation, all earnings are paid out as dividends. The firm has no debt (owner financed) so its cost of capital is its cost of equity, which is 10%. The corporate tax rate is 30%. Answer the following questions

1) How much is Falcon Windows worth to its owners?

2) If Falcon Windows buys back shares from the owners by borrowing $1 Million, how will this affect the value of the firm?

3) What will the companys WACC be after the firm borrows the money?