MoneySmart is an all$-$equity company with a firm value of $$30$ million, and the cost of

equity is $16\%.$ The company plans to raise $$5$ million of debt by selling $10\%$ annual coupon

bonds to the public, and the sale proceeds will be used to repurchase stocks and change the

company$$s capital structure. The company has a tax rate of $28\%.$

a$)$ If the company has a target cost of equity of $20\%$ after the capital restructure, what

will be the target deb$-$to$-$equity $($D$/$E$)$ ratio?

b$)$ What will be the weight of the equity in the company$$s total financing after the

restructure?

c$)$ What is the company$$s weighted average cost of equity $($WACC$)?$