Question of 12 marks: For each of lite Dwing events, state lite eller on the market value of the lirms revered assets W, COSTI , COST O equity, weighted average cost of capital aller lax, weighted average cose di capital Delore tax, and market value of levered equity I). Important assumptions: The risky firm's levered assets currently have the same systematic risk as the market partfolio, all events happen in isolation and are a surprise, and all transactions are done at a fair price. Assume a carparate tax rate of 30%, but there are na transaction costs, no asymmetric information (so ignore signalling effects), and no change in the credit risk of the firm's debt. Weighted System-atic risk Num shares in) Firm value Cost of debt of the firm's average cost of capital after VL D assets (VL) tax) Issues shares and . . uses the proceeds to invest in a positive NPV project with a higher systematic risk than the firm's usual investments Issues bonds and . . . . uses the pracends ta repurchase shares The corporate tax rata suddenly decreases by a material amount . . . . Conducts a 3-for-1 rights issue at a significant discount to the current market share price Invests in a lower than average risk project with a positive NPV, funded half with a bank loan and half with a share issue : . Unexpectedly generates larger than usual cash flows and uses those cash flows to repay debt. Conducts a 2 for 1 share split Question of 12 marks: For each of lite Dwing events, state lite eller on the market value of the lirms revered assets W, COSTI , COST O equity, weighted average cost of capital aller lax, weighted average cose di capital Delore tax, and market value of levered equity I). Important assumptions: The risky firm's levered assets currently have the same systematic risk as the market partfolio, all events happen in isolation and are a surprise, and all transactions are done at a fair price. Assume a carparate tax rate of 30%, but there are na transaction costs, no asymmetric information (so ignore signalling effects), and no change in the credit risk of the firm's debt. Weighted System-atic risk Num shares in) Firm value Cost of debt of the firm's average cost of capital after VL D assets (VL) tax) Issues shares and . . uses the proceeds to invest in a positive NPV project with a higher systematic risk than the firm's usual investments Issues bonds and . . . . uses the pracends ta repurchase shares The corporate tax rata suddenly decreases by a material amount . . . . Conducts a 3-for-1 rights issue at a significant discount to the current market share price Invests in a lower than average risk project with a positive NPV, funded half with a bank loan and half with a share issue : . Unexpectedly generates larger than usual cash flows and uses those cash flows to repay debt. Conducts a 2 for 1 share split