Malvern Enterprises is currently an all-equity financed firm. Malvern expected to have after-tax free cash flow in the coming year of 800000 dollars. Thereafter, this free cash flow is expected to grow at a rate of 0.03 per year forever. Malverns current equity beta is 1.3 (as an all-equity firm). The risk-free rate is 0.04 per annum and the market risk premium is 0.06 per annum.

Malvern now decided to issue 5000000 dollars in permanent debt and use the 5000000 dollars to repurchase its shares. The company will pay interest only on this debt and the interest rate is 0.045 per annum. Malvern's corporate tax rate is 0.31. Assume that the risk of interest tax shield is the same as that of the debt. Assume there are no transaction costs and the real investment policy of the company is not affected by its capital structure decisions.

Answer the following questions 3(a) to 3(e). Note: For all the calculation questions, you are only allowed to write the numerical answer you calculated for the question, please DO NOT add $, %, dollars, million, thousand, percent, space, etc. in your answers.

(a): Estimate the company's cost of capital before issuing debt (as an all-equity firm).

(b): Estimate the value of Malvern before issuing debt (as an all-equity firm). (Round your final answer to the nearest dollar if needed)

(c): What is the companys total present value after issuing debt? (Round your final answer to the nearest dollar if needed)

dAfter issuing debt, what is the companys after-tax Weighted Average Cost of Capital (WACC)? (Round your final answer to 3 decimal places if needed)

(e): Comment on the statement Due to the effect of interest tax shield, a company should always increase its use of debt.