Assume that Rosas e Cravos's (RC) EBIT is not expected to grow in the future and that all earnings are paid out as dividends. RC is currently an all equity firm. It expects to generate earnings before interest and taxes (EBIT) of $6 million over the next year. Currently RC has 5 million shares outstanding and its stock is trading for a price of $12.00 per share. RC is considering borrowing $12 million at a rate of 6% and using the proceeds to repurchase shares at the current price of $12.00. Assume a Modigliani Miller world without taxes. a) Prior to any borrowing and share repurchase, what is RC's Earnings per Share (EPS)? [3 marks] b) Prior to any borrowing and share repurchase, what is the RC's total value ? [2 marks] c) Prior to any borrowing and share repurchase, what is its equity cost of capital ? [3 marks] d) Following the borrowing of $12 million and subsequent share repurchase, what is the number of shares outstanding that RC will have? [2 marks] e) Following the borrowing of $12 million and subsequent share repurchase, what is its equity cost of capital ? [3 marks] f) Following the borrowing of $12 million and subsequent share repurchase, what is RC's Earnings per Share (EPS)? [3 marks] g) Following the borrowing of $12 million and subsequent share repurchase, what is RC's share price? [2 marks] h) Following the borrowing of $12 million and subsequent share repurchase, are RC's shareholders better or worse off ? [7 marks]