The Chief Financial Officer (CFO) of the Q14.05T Company is interested to identify the cost of capital and value of the company. Currently,theQ14.05Tis an all-equity company. Earnings before interest and taxes (EBIT) for the company is expected to be $86,198 forever, and the cost of capital is currently 14.05 percent. The corporate tax rate applicable to this company is 32.0 percent.

Requirement-A.Calculate the market value of Q14.05T.<1 mark>

Requirement-B.Suppose Q14.05T floats a $34,579 debt issue and uses the proceeds to reduce share capital. The interest rate is 10.74 percent. Calculate the new value of the business.<1 mark>

Requirement-C.Calculate the new value of equity.<1 mark>

Requirement-D.Calculate the cost of equity of Q14.05T after the debt issue.<1 mark>

Requirement-E.Calculate the weighted average cost of capital.<1 mark>

Requirement-F.What are the implications for capital structure?<1 mark>