Value of debt = 17,197,000

Share price= 114.33 per share

number of shares outstanding = 1,267,881

cost of equity = 14.8%

cost of debt= 2.1%

a. Find D/E ratio, cost of equity and WACC

b If the corporate tax rate is 36.5%. Find D/E ratio, cost of equity after tax and WACC after tax

c. Compare results in the above two questions, and use MM theory to explain the effect of capital structure on the equity cost of capital and WACC a) in perfect markets; and b) when corporate tax exists. (No calculation is needed.)