Question: Please help with the problem below. Thanks. [9' marks] [Total 25, marks] ( 4. The Mario Brothers Board of Directors need you to provide them

Please help with the problem below. Thanks.

[9' marks] [Total 25, marks] ( 4. The Mario Brothers Board of Directors need you to provide them with information an the impact of a recent corporate tax reduction on the company's share price and "doe: of capital It was recently announced that the corporate tax rate w'r be towered from 33% per annum. The foilowing information is provided for Mario Wine, \" LO BUSI1045-E1 Capital and reserves Ordinary shares (25p nominal) 3,000 Share premium 4,200 Profit and loss account 3,800 11,000 * 9% irredeemable loan stock, current market price is E112.5 ex interest. The debt may be assumed to be risk free. Mario Brothers Inc. ordinary share price is $2.50 ex dividend. The company's current dividend is 22.8p and the future growth rate for dividend is 6%. a. Calculate the cost of capital for Mario Brothers Inc. after the tax reduction. WALL [15 marks ] b. Why is financial leverage important for a firm? Discuss from Modigliani-Miller's perspective. [10 marks] [Total 25 marks]

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