Suppose you are a senior portfolio manager of an international investment bank that oversees a US investment portfolio with total assets of 28 billion. For company B\&G Ltd., you know the following information: EBIT=840,000 Interest rate =7% (before tax) Expected market return (Rm)=8% Total debt =1.5 million Tax rate =35% of B&G =1.4 Total equity =4.5 million Risk free rate (Rf)=5% a) What do you think about the current capital structure of this company? Is this company creating value? b) The CFO suggests buying back shares (at their book value) and thus reducing the equity capital to 2.5 million (again, at book value). They will use cash for the buyback and everything else ceteris paribus. Is this a good suggestion? Critically evaluate your