In problems where no equity risk premium or tax rate are provided, please use an equity risk premium of 5.5% and a tax rate of 40%.

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0. Terck, a leading pharmaceutical company, currently has a balance sheet that is as follows: The firm's income statement looks as follows: The firm's bonds are all 20-year bonds with a coupon rate of 10% that are selling at 90% of face value (the yield to maturity on these bonds is 11%). The stocks are selling at a P/E ratio of 9 and have a beta of 1.25 . The risk-free rate is 6%. a. What is the firm's current cost of equity? b. What is the firm's current after-tax cost of debt? c. What is the firm's current weighted average cost of capital? Assume that management of Terck, which is very conservative, is considering doing an equity-for-debt swap (i.e., issuing $200 more of equity to retire $200 of debt). This action is expected to lower the firm's interest rate by 1%. d. What is the firm's new cost of equity? e. What is the new WACC? f. What will the value of the firm be after the swap? (zero growth rate)