XYZ Corporation is considering a change in its capital structure. It has three options. Option 1: Issue $1 billion in new stock and repurchase half of the outstanding debt. This will make it an AAA rated firm. The yield of the AAA rated firms is 11%. Option 2: Issue $1 billion in new debt and buy back stock. This will drop its rating to A-. The yield of the A- rated firms is 13%. Option 3: Issue $3 billion in new debt and buy back stock. This will drop its rating to CCC. The yield of the CCC rated firms is 18%. a. Calculate the cost of equity, cost of debt and cost of capital under each option. b. Calculate the value of the firm, the value of equity and debt and the stock price under each option. c. Using the cost of capital approach, which of the three options would you pick, or would you stay at your current capital structure? d. How would your analysis change (if at all) if the money under the three options listed above were used to take new investments (instead of repurchasing debt or equity)? XYZ Corporation is considering a change in its capital structure. It has three options. Option 1: Issue $1 billion in new stock and repurchase half of the outstanding debt. This will make it an AAA rated firm. The yield of the AAA rated firms is 11%. Option 2: Issue $1 billion in new debt and buy back stock. This will drop its rating to A-. The yield of the A- rated firms is 13%. Option 3: Issue $3 billion in new debt and buy back stock. This will drop its rating to CCC. The yield of the CCC rated firms is 18%. a. Calculate the cost of equity, cost of debt and cost of capital under each option. b. Calculate the value of the firm, the value of equity and debt and the stock price under each option. c. Using the cost of capital approach, which of the three options would you pick, or would you stay at your current capital structure? d. How would your analysis change (if at all) if the money under the three options listed above were used to take new investments (instead of repurchasing debt or equity)