The Chief Financial Officer (CFO) of the Q13.70T Company is interested to identify the cost of capital and value of the company. Currently, the Q13.70T is an all-equity company. Earnings before interest and taxes (EBIT) for the company is expected to be $89,603 forever, and the cost of capital is currently 13.70 percent. The corporate tax rate applicable to this company is 31.2 percent.

Requirement-A. Calculate the market value of Q13.70T.

Requirement-B. Suppose Q13.70T floats a $28,864 debt issue and uses the proceeds to reduce share capital. The interest rate is 8.01 percent. Calculate the new value of the business.

Requirement-C. Calculate the new value of equity.

Requirement-D. Calculate the cost of equity of Q13.70T after the debt issue.

Requirement-E. Calculate the weighted average cost of capital.

Requirement-F. What are the implications for capital structure?