Please answer the following and show all steps:

4. WDC Corporation is a diversified entertainment firm consisting of movie production, animation studios, gaming software, retail, and travel. Below is the most recent income statement stated in billions of dollars. Assume perpetual cash flows. Revenue $10.00 Operating Expenses (6.00) Interest (0.32 ) Taxes 1.10) Net Income $2.58 Currently WDC has 1 billion shares outstanding. The beta of the equity for WDC is 1.43, the risk-free rate is 5%, and the market risk premium is 7%. The market value of the bonds is $4 billion. WDC pays out all its earnings as dividends. Required: Using Discounted Cash Flow techniques, value the operating assets, tax shield, and equity of WDC. Prepare a market value Balance Sheet. Calculate WDC's WACC. a) 15 marks b) 10 marks WDT has decided to issue $1 billion in debt and use the cash raised to reduce current equity by $1 billion. Using Modigliani and Miller's model of capital structure with corporate taxes and costless bankruptcy and financial distress, calculate the following: I. The new share price II. Shares outstanding when the restructuring is complete. III. The restructured balance sheet. 3 marks 3 marks 4 marks 4. WDC Corporation is a diversified entertainment firm consisting of movie production, animation studios, gaming software, retail, and travel. Below is the most recent income statement stated in billions of dollars. Assume perpetual cash flows. Revenue $10.00 Operating Expenses (6.00) Interest (0.32 ) Taxes 1.10) Net Income $2.58 Currently WDC has 1 billion shares outstanding. The beta of the equity for WDC is 1.43, the risk-free rate is 5%, and the market risk premium is 7%. The market value of the bonds is $4 billion. WDC pays out all its earnings as dividends. Required: Using Discounted Cash Flow techniques, value the operating assets, tax shield, and equity of WDC. Prepare a market value Balance Sheet. Calculate WDC's WACC. a) 15 marks b) 10 marks WDT has decided to issue $1 billion in debt and use the cash raised to reduce current equity by $1 billion. Using Modigliani and Miller's model of capital structure with corporate taxes and costless bankruptcy and financial distress, calculate the following: I. The new share price II. Shares outstanding when the restructuring is complete. III. The restructured balance sheet. 3 marks 3 marks 4 marks