Multicare Corporation an all-equity firm has perpetual EBIT of $2.5 million per year. The all-equity discount rate R0 is 20%. The companys tax rate is 34%. Although the firm does not have any debt now, if it decides to borrow then its (before-tax) cost of debt capital would be 12%. a. What is Multicares firm value now? b. What is Multicares WACC if it decides to use debt financing to cover 30% of its firm value? c. Instead of making the change described in part b), Multicares management considers issuing $5 mil. of debt and repurchasing $5 mil. of equity, i.e., Multicare would simply alter its capital structure without altering its business operations or its EBIT. What is Multicares cost of equity (RE), if the firm goes through with this plan? Assume that the debt is a perpetuity. {Note that in part (c) the change in capital structure alters the firm value.}