This information applies to the following set of questions. Steady State Inc. (SSI) is a profitable company that has stayed the same size for the past few years (as measured by its Balance Sheets, Income Statements and Cash Flow Statements). You expect SSI to maintain this steady-state condition into perpetuity, except for possible changes to its capital structure. This simple firm has no accruals, no PPE or etc, so for any given year its NI = FCF to owners. The firm is debt free. Given the below data, find (as requested) SSi's optimum WACC, E, ID and D/(D+E) ratio. Choose among the three cases listed. Notes Annual Income Statement Revenue - SGA -Interest =EBT - Tax = NI = FCFE SMM UON $193.60 ($154.88) $0.00 $38.72 ($17.42) $21.30 $21.30 Company is debt free. FCF = NI because of no accruals, PPE, etc. 4.00% Rates and other constants FRF Bu Trate 7.00% 1.10 45.00% Variable Ratios and Rates Case 2 45.00% D/(D+ E) = Wp 1 0.0% 0.00% 3 80.0% To 7.50% 14.00% TE 9.00% 11.00% 18.00% 4 Which case corresponds to the optimal WACC? O Case 3 O Case 1 Case 2 This new information, and the previously-provided info, applies to all the remaining questions. SSI is for sale for the price shown below (for 100% of the firm's stock). You would like to buy the firm. As part of the purchase transaction, you will optimize Ssi's capital structure for all stakeholders. IE: you will use some of your cash to fund the purchase of all its stock, and have the firm take out a loan on the purchase date to fund any remaining amount. Purchase price of firm's equity (100% of the firm's stock): $200.00 MM 7 13 Based on your above analysis, what is the D/(D+E) ratio that you will set for the firm? 55% 60% 45% O 15% 35% 9% 20% 75% 8 13 How much of your cash will you use to fund the purchase? (You are just buying stock, not working with a team to also provide a loan to the company)Report your answer to one decimal place. 9 15 How large is the loan that I will take out to fund the rest of the purchase? Report your answer to one decimal place