QST Ventures has $100 million in permanent/perpetual debt and $900 million in equity. Its cost of debt is 5% and currently its cost of equity equals 10%. The firm pays a corporate tax rate of 50%. Firm has no expected growth and stable cash flows, which are assumed in the best/worst case to equal +/25% of expected earnings.

VALUE OF ASSET IS NOT GIVEN IN THE QUESTION. I'm assuming it has to with the fact that Return on Unlevered Equity = Return on Assets

a) What is the firms weighted average cost of capital?

b) What is the firms return on assets?

c) What is the expected earnings and worst-case interest coverage(i.e. interest paid divided by earnings)?

d) The firm increases its debt from 100 to 200, uses the proceeds to buy back equity, and can keep its cost of debt constant at 5%. What is the additional present value of the tax shield, PV(ITS)?

e) What is the new levered firm value?

f) What is the new return on equity?

g) What is the new WACC?