TIGER BRANDS is preparing to make a capital structure decision. The firm's total asset is R4m while the estimated EBIT is R1.5m. The firm's management is considering 3 alternative capital structures. The proposed debt ratios are 20%, 40%, 60% with an associated interest cost of 10%, 15%, and 17% respectively. Suppose the firm's estimated required rate of return for equity is 17%, 20%, and 25%, and the total outstanding shares are 32,000, 24,000 and 16,000 respectively for the proposed debt ratios, the price per share associated with the firm's optimal capital structure is if the firm's tax rate is 40%. (round off all workings to 2 decimal places) NB: capital structure theory assumes that all earnings are paid as dividends. a R157.50 b. R204.75 R156.64 d. R163.80 UZZI Limited shares are trading at a price of R31.50, and its bonds is currently trading at par (R1000). The firm's target debt ratio is 35% and its ROE is 20.%. UZZI recently paid a dividend of R2.00 per share, with earnings per share of R5.00. The firm's bonds mature in 20 years' time and currently have a yield to maturity of 11.21%. If the company's tax rate is 31%, what is the WACC?(round off to 4 decimal places) a. 16.35% b. 20.16% C. 15.90% d. 15.13% Regarding leverage, which of the following statements is not true? 1. The risk associated with leverage is completely outside the control of the firm's management, II. An inventory cost is a good example of fixed costs III. Operating leverage expresses the relationship between EBIT and EPS IV. The concept of leverage is linear because it uses variable operating costs to magnify earnings to the shareholders O a. Il & Ill only b. 1 & IV only C. I, II, III & IV d. lll only Regarding the cost of capital, which of the following statements is not true? I. Weighted average cost of capital is the same as the weighted marginal cost of capital II. Investment opportunity schedule ranks the investment opportunities in increasing order of profitability III. Cost of capital captures the interplay between investment and financing decision IV. Weighted average cost of capital is a decreasing function of the level of total new financing O a. 11 & Ill only O b. I, II, III & IV Oc. I, II & IV only d. 1 & IV only