Question: Using Corporate Tax Rate of 36.5%. For Game of Function Inc. (GFI), compute the market debt to equity (D/E) ratio, the cost of equity (rE) and the weighted average cost of capital (WACC) for GFI. It is assumed the cost of unlevered equity (ru) is 10%, use the (Q2) table below and showing working on another sheet. (Hints: (1) the market value of debt is the sum of Long-Term Debt and Short-Term Debt/Current Portion of Long-Term Debt subtracting Cash and Cash Equivalents from the balance sheet. (2) Use market value of equity in calculating WACC.) Question Information: Average Number of Shares Outstanding (000s) Average Cost of Debt Current Stock Price 1,267,881 5.0% $114.33 Value of debt 000s Mkt value of Equity 000s Market value of assets Market D/E ratio Unlevered cost of equity (ru) rD rE WACC Q1 Q2 Perfect Capital Mkt @36.5% tax rate Period Ending: Balance Sheet (000s) 31/12/2020 Current Assets Income Statement (000s) Cash and Cash Equivalents Period Ending: 31/12/2020 Short Term Investments Total Revenue Cost of Revenue Gross Profit 108,128,800 Net Receivables 1,723,000 0 1,484,000 70,488,600 Inventory Other Current Assets 37,640,200 Total Current Assets 11,079,000 1,016,000 15,302,000 Operating Expenses Long Term Assets Sales, General and Admin. 21,884,200 Fixed Assets Other Operating Items 2,146,300 Goodwill 22,720,000 1,353,000 Operating Income 13,609,700 Intangible Assets Other Assets Additional income/expense items 438,100 Total Assets 0 571,000 39,946,000 EBIT 14,047,800 Interest Expense 1,079,000 Liabilities & stockholders' Equity: Earnings Before Tax 12,968,800 Accounts Payable 9,473,000 Income Tax 4,720,300 Short Term Debt/Current Portion of Long-Term Debt 328,000 Net Income-Cont. Operations 8,248,500 Other Current Liabilities 1,468,000 Total Current Liabilities 11,269,000 Long Term Debt 16,869,000 Other Liabilities 1,844,000 Deferred Liability Charges 642,000 30,624,000 Total Liabilities Share Holders Equity Common Stocks Capital Surplus Retained Earnings Treasury Stock Other Equity Total Equity 88,000 8,885,000 26,995,000 -26194000 -452000 9,322,000