Question 2 15 pts In anticipation of a potential acquisition, We-Buy-Everything. (WBE) has hired you to estimate the value of its company. After a discussion with the CFO, you are told that the company has no debt however it would like to issue $7.4 Million of perpetual debt to exclusively repurchase some of the 1,600,000 shares it currently has outstanding. Furthermore, the CFO of WBE notifies you that the company has been generating $5.75 of Earnings Per Share which it expects to remain constant into perpetuity. Other pertinent details are as follows: WBE distributes all of its earnings as dividends at the end of each year Its current weighted average cost of capital is 15% Its corporate tax rate is 30% The cost of debt if/when it issues debt would be 8% Provided all of the above information: A. Calculate the market value of the firm under its current and proposed capital structure (5 Marks). B. Use the FTE and WACC approach to verify the market value of the firm under its proposed capital structure (10 Marks). Be sure to show all your work (i.e. supporting calculations) for each approach. Upload Choose a File