A dre Abde Albed AaBb As wa AEEE! AIA- Heading 1 Currently, the Fotopoulos Corporation's balance sheet is as follows: Assets $5 billion Debt Common equity $1 billion 4 billion Total assets $5 billion Total debt & common equity $5 billion The book value of the company (both debt and common equity) cquals its market value (both debt and common equity). Furthermore, the company has determined the following information: The company estimates that its before-tax cost of debt is 9 percent, The company estimates that its levered beta is 1.2. The risk-free rate is 5 percent. The market risk premium, RM-RF, is 5 percent. The company's tax rate is 40 percent. In addition, the Fotopoulos Corporation is considering a recapitalization. The proposed plan is to issue $1 billion worth of debt and to use the money to repurchase $1 billion worth of common stock. As a result of this recapitalization, the firm's size will not change. 6. What is Fotopoulos' current WACC (before the proposed recapitalization)? 9.88% 7. What is Fotopoulos' current unlevered beta (before the proposed recapitalization)? Be sure that the beta you use is carried out to 4 decimal places. 1.0435 8. What will be Fotopoulos' new levered beta if it proceeds with the recapitalization? Be sure that the beta you use is carried out to 4 decimal places. 1.4609 9. What will be the company's new cost of common equity if it proceeds with the recapitalization? (Hint: Be sure that the beta you use is carried out to 4 decimal places.) 12.30% Focus MacBook Air