The following information relates to the next five questions.

Alpha is an unlevered firm in which shareholders require a return of 14% after-tax. Alpha is valued at $100,000 and corporate taxes are 30%.

33. What are the perpetual earnings before interest and taxes of Alpha?

A. $25,000

B. $15,000

C. $26,667

D. $20,000

34. What is the theoretical value of Alpha if it uses $70,000 of new perpetual debt to buy back shares if the interest rate is 10%?

A. $109,600

B. $121,000

C. $108,000

D. $128,333

35. What return will shareholders require in Alpha after it becomes levered?

A. 9.3%

B. 19.6%

C. 22.1%

D. 17.8%

36. What is the weighted average cost of capital in Alpha if it is unlevered?

A. 15.0%

B. 14.2%

C. 12.5%

D. 14.0%

37. What is the weighted average cost of capital in Alpha after it issues the debt?

A. 15.4%

B. 15.5%

C. 12.1%

D. 11.6%