You have been hired as a management consultant by FDS Corporation in evaluate whether it has an appropriate amount of debt [the company is worried about a leveraged buy cut.] You have collected the following information on FDS's current position - There are 100, 000 shares outstanding at $20/share. The stock has a beta of 1.15, Market rise premium is 4% - The company has $500, 000 in long-term debt outstanding and is currently rated BBB. The current market interest rate is 11% on BBB bonds and B% on treasury bonds. - The company's marginal tax rate is 30%. You proceed to collect the data on what increasing debt will do to the company's ratings: a) How much additional debt should the company take on? b) What will the price per share be after the company takes on new debt? [You can assume a 2% growth rate in perpetuity) c) What is the WACC before and after the additional debt? You have been hired as a management consultant by FDS Corporation in evaluate whether it has an appropriate amount of debt [the company is worried about a leveraged buy cut.] You have collected the following information on FDS's current position - There are 100, 000 shares outstanding at $20/share. The stock has a beta of 1.15, Market rise premium is 4% - The company has $500, 000 in long-term debt outstanding and is currently rated BBB. The current market interest rate is 11% on BBB bonds and B% on treasury bonds. - The company's marginal tax rate is 30%. You proceed to collect the data on what increasing debt will do to the company's ratings: a) How much additional debt should the company take on? b) What will the price per share be after the company takes on new debt? [You can assume a 2% growth rate in perpetuity) c) What is the WACC before and after the additional debt