Question 9: DCM Corp. has annual cost of debt and common equity of rb = 8% rs = 18% It has 45,000 corporate bonds outstanding, valued at $987.62 each, and 36,500,000 common shares with a market value of $1.55 each. DCM's corporate tax rate is 35%. DCM Corp. exists in a Modigliani and Miller with corporate taxes. a) What is the cost of capital for DCM Cop. (2 marks) b) Draw and label a diagram (label both axes) showing the relationship of the cost of equity for the unlevered firm, the after-tax cost of debt, the cost of equity for the levered firm and the WACC in this M&M world. (1/2 marks) c) Suppose that in the M&M world describe, DCM Corp. decides to decrease financial leverage to zero, by moving to all-equity financing. Calculate DCM's new cost of capital? (Assume debt is essentially risk-free.) (1 72 marks)