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please show all work In mid-2009, Rite Aid had CCC-rated, 6-year bonds outstanding with a yield to maturity of 17.3%. At the time, similar maturity

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In mid-2009, Rite Aid had CCC-rated, 6-year bonds outstanding with a yield to maturity of 17.3%. At the time, similar maturity Treasuries had a yield of 3 %. Suppose the market risk premium is 5% and you believe Rite Aid's bonds have a beta of 0.31. The expected loss rate of these bonds in the event of default is 60%. a) What annual probability of default would be consistent with the yield to maturity of these bonds in mid-2009? b) In mid-2015, Rite-Aid's bonds had a yield of 7.1 %, while similar maturity Treasuries had a yield of 1.5%. What probability of default would you estimate now? c) From 2010 to 2014, the annual market returns were 10%, -5%, 10%, 7%, and 3%. During the same years Rite Aid's annual stock returns were 15%, -9%, 20%, 12%, and 2%. What is the equity beta and expected equity return of Rite Aid using these five years of data? In mid-2015 WholeFoods decides to expand their operations into the pharmacy sector. As a comparable company, the CEO of WholeFoods has identified Rite Aid, which currently has a Debt-to-Equity Ratio of 3. Whole Foods stock price is $20 per share, with 15 million shares outstanding. It also has $100 million in outstanding corporate debt, with an average credit rating of A- and a debt beta of 0.05 (Whole Foods plans to maintain the same capital structure going forward). Find the appropriate after-tax WACC for Whole Food's expansion project if the company will be subject to a 25% corporate tax rate

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