Hi. Would like some help with these 2 subparts questions. Thanks a lot.

This is all that's given to us.

Cost of equity is calculated by 45/300

Assume a Modigliani-Miller (MM) world. AntiVaxer, PaleoBro, and Boop are three similar com- panies in the wellness industry with the following capital structures and cash flows: AntiVaxer PaleoBro Boop 20 10 6 $30 $35 $10.50 105 390 Shares outstanding (millions) Share prich Market value of perpetual debt ($million) Expected earnings before interest ($million) Interest expense (Smillion) Dividends ($million) 45 45 90 5.25 19.5 45 39.75 70.5 All three firms share identical business and operating risk characteristics, producing perfectly correlated earnings. Expected earnings will remain constant in perpetuity. All earnings are paid out as interest or dividends every year, these payouts are also expected to remain constant. When answering the question, state any additional assumptions you may need to make. Show all working/calculations. Now assume companies must pay corporation tax at a rate of 30%. Interest is tax deductible, there are no personal taxes, and markets are semi-strong form efficient. All other MM assump- tions still hold. (d) Re-compute the fair share price for each company. Remember, the cash flows in the table above are in an MM world (i.e. no taxes). Assume AntiVaxer shares and all debt securities are priced at fair value in the MM world. [3 marks] (e) Suppose AntiVaxer announces plans to restructure by raising sufficient perpetual debt at an interest rate of 5% to repurchase 2 million shares. How much debt will be raised and at what price will shares be repurchased? How will its price-earnings ratio (P/EPS.) change as a result of the restructure? Without doing any additional calculations, explain why this change would be bigger/smaller in an MM world. [7 marks]