'END-OF-CHAPTER PROBLEMS 8.1 Seattle Health Plans currently uses zero-debt financing. Its operating profit is $1 million, and it pays taxes at a 40 percent rate. It has $5 million in assets and, be. cause it is all-equity financed, $5 million in equity. Suppose the firm is considering replacing half of its equity financing with debt financing that bears an interest rate of 8 percent. a. What impact would the new capital structure have on the firm's profit, total dol- lar return to investors, and return on equity? b. Redo the analysis, but now assume that the debt financing would cost 15 percent. c. Repeat the analysis required for part a, but now assume that Seattle Health Plans is a not-for-profit corporation and hence pays no taxes. Compare the results with those obtained in part a. 8.2 Calculate the effective (after-tax) cost of debt for Wallace Clinic, a for-profit health- care provider, assuming that the interest rate set on its debt is 11 percent and its tax rate is set at the following levels: a. o percent b. 25 percent C. 40 percent search OBI