School Yearbook (SY) Inc. has recently launched an IPO and is still an all-equity firm. Kathy, its CFO, found that the industry average debt-to-total-assets ratio is about 30%. She had decided to recommend that the board of directors accept an 8% perpetual loan offered by its bank to buy back some common shares and to introduce debt into its capital structure. This restructuring issue is especially urgent, because interest rates are expected to increase soon. SY currently has 10 million common shares outstanding with a value of $150 million. Its earnings before interest and taxes (EBIT) are expected to be $50 million per year forever, and it pays out all the earnings available to shareholders as dividends. The corporate tax rate for SY is 40%. Kathy has asked you to provide quantitative evidence to support her recommendation by answering the following questions. a) Calculate SY's current price per share, cost of equity, and weighted average cost o capital (WACC). b) Calculate the amount of loan that SY should borrow to increase its debt-to-totalassets ratio to 30% according to Miller and Modigliani (MM; Case or Propostion II with taxes). Calculate the value of the firm (assets), value of equity, cost of equity, WACC, and price per share, and the number of shares outstanding after the share repurchase. Show that SY will reduce its WACC after this share repurchase/restructuring. c) What another possible purpose would share repurchase serve