please do not use excel and show steps

6. Santa Fe Pacific, a major rail operator with diversified opcrations, had earnings before interest, taxes, and depreciation of $637 million in 1993, with depreciation amounting to $235 million (offset by capital expenditure of an equivalent amount). The firm is in a steady state and is expected to grow 6\% a year in perpetuity. Santa Fe Pacific had a beta of 1.25 in 1993 and debt outstanding of $1.34 billion. The stock price was $18.25 at the end of 1993 , and there were 183.1 million shares outstand. ing. The expected ratings and the costs of debt at different levels of debt for Santa Fe are shown in the following table (the Treasury bond rate is 7%, and the firm faced a tax rate of 40% ): The earnings before interest and taxes are expected to grow 3% a ycar in perpetuity, with capital expenditures offset by depreciation. (The tax rate is 40%, and the Treasury bond rate is 7%.) a. Estimate the cost of capital at the current debt ratio. b. Estimate the costs of capital at debt ratios ranging from 0% to 90%, c. Estimate the value of the firm at debt ratios ranging from 0% to 90%. 6. Santa Fe Pacific, a major rail operator with diversified opcrations, had earnings before interest, taxes, and depreciation of $637 million in 1993, with depreciation amounting to $235 million (offset by capital expenditure of an equivalent amount). The firm is in a steady state and is expected to grow 6\% a year in perpetuity. Santa Fe Pacific had a beta of 1.25 in 1993 and debt outstanding of $1.34 billion. The stock price was $18.25 at the end of 1993 , and there were 183.1 million shares outstand. ing. The expected ratings and the costs of debt at different levels of debt for Santa Fe are shown in the following table (the Treasury bond rate is 7%, and the firm faced a tax rate of 40% ): The earnings before interest and taxes are expected to grow 3% a ycar in perpetuity, with capital expenditures offset by depreciation. (The tax rate is 40%, and the Treasury bond rate is 7%.) a. Estimate the cost of capital at the current debt ratio. b. Estimate the costs of capital at debt ratios ranging from 0% to 90%, c. Estimate the value of the firm at debt ratios ranging from 0% to 90%