Leprechaun Limited (Lep Ltd) operates in a world of certainty where corporate tax rates reflect the Irish pro-business attitude at 10%. The current owners of the company, whose only assets are a new technological process for extracting whiskey from water, can generate 1.5 million, once and only once, one period later for an investment of 0.5 million. Lep Ltd can borrow up to 0.25 million using debt (any more debt is strictly prohibited by Irish statutes); the rest must be equity. Work out the company's debt-equity ratio if the euro interest rate is 5%. Determine the value of the existing owner's equity, and the weighted average cost of capital (WACC). If the company could increase its debt-equity ratio, would anyone benefit? If so, who, and why? As supporting evidence for your conclusions you should construct a simple income statement for the coming period under the alternative capital structures for funding the new project: (i) a 50-50 mix of debt and new equity and (ii) 100% funding with debt.