A tax rate of 20% has been introduced in the Frog Islands Republic. The value of Sun corporation is now 100.000€. Bright Star Co. debt has no changed. The required rate of return to Sun Co. continues being 7.5% and the risk free interest rate 5%.
1) Why the value of the Sun Co. is now 100.000€?
2) Which is now the Bright Star equity fair value?
3) Which is now the Bright Star equity required rate of return? And it's WACC?