Complete the table below and then answer the questions. No Debt Moderate Debt High Debt Weight of equity 1 0.6 0.2 weight of debt 0 0.4 0.8 tax rate 0.21 0.21 0.21 Unlevered Beta 2 2 2 Levered Beta Risk-Free 3.15% 3.15% 3.15% MRP 5.04% 5.04% 5.04% Cost of Equity No Debt Moderate Debt High Debt weight of equity 1 0.6 0.2 weight of debt 0 0.4 0.8 cost of equity cost of debt 0 4% 5.5% tax rate 0.21 0.21 0.21 WACC 1. What do you notice about the beta and cost of equity as debt increases? What explains this? 2. What do you notice about the cost of debt as debt increases? What explains this? 3. What do you notice about the cost of capital as debt increases? What explains this?