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se the following information for the next five questions wou have ust been hired business manager of Sunbucks, a coffee shop located adjacent top The firm is currently financed with 55% equity and 45% debt; it has 50,000 shares banding The management group owns about 60 percent of the stock, and the stock is graded in the over the counter market. The company's EBIT was 1,000,000 last year, and since the university's woment is capped, EBIT is expected to remain constant (in real termst over time. Since no expansion capital will be required, Sunbucks plans to pay out all earnings as dividends. You ested to your new boss that the firm should engage in a capital restructure by issuing more debt and use the proceeds to repurchase stocks. Your boss encouraged you to pursue the idea. As a first stes assume that you obtained from the firm's investment banker the following estimated costs of debt for the firm at different capital structures: Xanced With Debt Rd OX 39 45 60 124 Sunbucks is in the 30 percent state plus federal corporate tax bracket its current beta is 1.2. the isree rate is 5 percent, and the market return is 12 percent. Calculate Sunbucks' unlevered beta Sunbudaks in the 30 percent state-plus-federal corporate tax bracket, its current bets 12. Hat-tree rate is 5 percent, and the market return is 12 percent Calculate Sunbuck unlevered beta. 0.822 1.200 0.667 1.113 0.763 Calculate Sunbucks's WACC under the optimal capital structure. 10.835% 11.42% 10.15% 10.754% 10.250% 10.341% Calculate the resulting value of the debt that will be issued for the optimal capital structure of Sunbucks O 6,769.145 6,769,145 -2,785.762 -858,534 770,625 Calculate the market value of equity for Sunbucks under the optimal capital structure. 1) 3,795,783 2) 3,983,383 3) 4,073,892 4) 3,663,862 5) 3,921,792 Calculate the resulting Price ($) Per Share of Sunbucks under the optimal capital structurer share repurchase 77.35 68.10 86.06 78.44 79.67 71.79 Reeve Company is a privately held company in a growing industry. The company is expected to produce free cash flows of $15 million in one year, $20 million in two years, and $28 million in three years. After three years, free cash flow will grow at a rate of 5%. The company's balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. The company also paid $30 million interest expenses. Its WACC is 10% and it currently has 10 million shares of stock. What is Reeve Company's Horizon Value in Smillion? What is Reeve Company's Horizon Value in Smillion? 442 508 560 616 588 What is Reeve Company's Value from Operations? 1) 477.95 O2) 515.51 03) 402.82 4) 417.84 5) 492.98 What is Reeve Company's current total value in Smillion? O $1,002.98 O $732.98 $592.98 $822.98 $492.98 What is Reeve Company's Market Value of Equity? 1) 174.31 2) 362.98 3) 181.62 4) 275.46 5) 122.98