Problem 3. Capital Structure [Total 20 points] AlCloud Inc. is raising funds through equity and debt (bond). The company currently has \(1,000,000\) shares of stock outstanding, which are trading today (time 0) at a price of \(\$ 5.0\) per share. Today they issue a bond with face value \(\$ 5,000,000\) and maturity in 5 years. The bond pays an annual coupon of \(5.0\%\) and the coupon is paid semiannually each year. The bond is issued at a discount, specifically, it is issued at \(\$ 90.0\) per \(\$ 100.0\) of face value, and the next coupon is due in six months from today. Given its current capital structure, AICloud Inc. has estimated that its cost of equity is \(15\%\). AlCloud Inc. faces a marginal tax rate of 20\%. a.[5 points] What is the value of the company? b.[5 points] What is the weighted average cost of capital? AlCloud Inc. decided to issue new stock (shares) to retire all debt. The cost of debt and tax rate remain unchanged after the change in the capital structure. Once the capital structure is changed: c.[2 points] is the value of the company increasing or decreasing? Pease explain. d.[3 points] What is the cost of equity? e.[5 points] What is the weighted average cost of capital?