(SHOW CALCULATIONS PLEASE) The Rivoli Company has no debt outstanding and its financial position is given by...

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(SHOW CALCULATIONSPLEASE) The Rivoli Company has no debt outstandingand its financial position is given by the following data:
Market value of Assets $10,000
EBIT (earnings before interest and tax) $1,500
Stock price $10
Shares outstanding 1,000
Tax rate 35%
The firm is considering selling bondsand simultaneously repurchasing some of its stock. If it moves to acapital structure with 40% debt based on market values, the bondscan be sold at a cost, r_d, of 8%. Rivoli is a no-growthfirm and all of its earnings are paid out as dividends. Now answernext 8 questions.
a. What is Rivoli’scurrent cost of equity?
b. If the risk freerate is 3 percent and the market risk premium is 5 percent, what isRivoli’s unlevered beta?
c. What is thelevered beta at the new capital structure of 40 percent debt?
d. What is the newcost of equity under the capital structure financed with 40 percentdebt?
e. What is its newweighted average cost of capital?
f. What is the newtotal corporate value of Rivoli?
g. What is the newstock price?
h. How many sharesremain outstanding after the recapitalization?

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(SHOW CALCULATIONSPLEASE) The Rivoli Company has no debt outstandingand its financial position is given by the following data:Market value of Assets$10,000EBIT (earnings before interest and tax)$1,500Stock price$10Shares outstanding1,000Tax rate35%The firm is considering selling bondsand simultaneously repurchasing some of its stock. If it moves to acapital structure with 40% debt based on market values, the bondscan be sold at a cost, rd, of 8%. Rivoli is a no-growthfirm and all of its earnings are paid out as dividends. Now answernext 8 questions.a. What is Rivoli’scurrent cost of equity?b. If the risk freerate is 3 percent and the market risk premium is 5 percent, what isRivoli’s unlevered beta?c. What is thelevered beta at the new capital structure of 40 percent debt?d. What is the newcost of equity under the capital structure financed with 40 percentdebt?e. What is its newweighted average cost of capital?f. What is the newtotal corporate value of Rivoli?g. What is the newstock price?h. How many sharesremain outstanding after the recapitalization?

Market value of Assets	$10,000
EBIT (earnings before interest and tax)	$1,500
Stock price	$10
Shares outstanding	1,000
Tax rate	35%