Please help me solve 1 and 2 with their sub questions. thx!

1.

ABC Co. and XYZ Co. are identical firms in all respects except for their capital structure. ABC is all-equity financed with $600,000 in stock and its required return of equity is 15%. XYZ uses both stock and perpetual debt; its stock is worth $300,000 and the interest rate on its debt is 10 percent. Ignore taxes.

a. Suppose Rico owns $30,000 worth of XYZs stock. What rate of return is she expecting?

b. What is the WACC for ABC? For XYZ? What principle have you illustrated?

2. Wolfrum Technology (WT) has no debt. Its assets will be worth $450 million in one year if the economy is strong, but only $200 million in one year if the economy is weak. Both events are equally likely. The market value today of its assets is $250 million. Ignore taxes.

a. What is the cost of equity of WT stock without leverage?

b. Suppose the risk-free interest rate is 5%. If WT borrows $100 million today at this rate and uses the proceeds to pay an immediate cash dividend, what will be the market value of its equity just after the dividend is paid, according to MM?

c. What is the cost of equity of WT stock after the dividend is paid in part (b)?

disregard Proble #1

EBIT for #1 is $70,000