Mercer Corp. has 10000 shares outstanding and100000dollars worth of debt outstanding. Its current share price is 75 dollars. Mercer's equity cost of capital is 0.085 per annum. Mercer has just announced that it will issue 400000 dollars worth of debt. It will use the proceeds from this debt to pay off its existing debt, and use the remaining300000 dollars to pay an immediate dividend. Assume perfect capital markets.

8(a):What is Mercer's share price just after the recapitalization is announced, but before the transaction occurs?

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Question15

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8(b): What is Mercer's total value of equity at the conclusion of the transaction?

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8(c):What is Mercer's share price at the conclusion of the transaction?

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8(d):Suppose Mercer's existing debt was risk-free with a 0.0425 per annum expected return, and its new debt is risky with a 0.05 per annum expected return. Estimate Mercer's equity cost of capital after the transaction. (Round your final answer to 3 decimal places if needed)