Question: Answer correctly!! 7. Gnu Grid is a small all-equity company specializing in micro-grids for rural areas. The company is considering a restructuring to raise $500

Answer correctly!!

Answer correctly!! 7. Gnu Grid is a small all-equity company specializing in

7. Gnu Grid is a small all-equity company specializing in micro-grids for rural areas. The company is considering a restructuring to raise $500 in debt at a cost of 8%. Gnu Grid currently has an annual EBIT of $300, which can be assumed to continue in perpetuity. The tax rate faced by Gnu Grid is 35% and the unlevered cost of equity for micro-grid firms is 30%. Calculate the following: a. (20 pts) Rs, the cost of equity to the levered firm b. (10 pts) The WACC for the levered firm

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