Question: correct and show work i upvote Optimal Capital Structure with Hamada Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA
Optimal Capital Structure with Hamada Beckman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currently has $20 million in debt carrying a rate of 7% and its stock price is $40 per share with 2 million shares outstanding, BEA is a zero growth firm and pays out all of its earnings as dividends. The firm's EBIT is $14.711 million, and it faces federai pluss tax rate. The market risk premium is 5%, and the risk free rate is 7 BEA is considering increasing its debt level to a capital structure with 45% dett, based on market values, and repurchasing shares with the extra money that it borrows. BEA will have to retire the old debt in order to issue new debt, and there on the new debt will be 114. A has a beta of 0. 1. What is BEA's unlevered beta? Use market value D/S (which is the same as wa/W) whan unlevering. Do not found intermediate calculations. Round your answer to two decimal places .77 bi What are BEA's new beta and cost of equity if it has 45% debt? Do not round intermediate calculations. Round your anpwers to two decimal places 1.18 Cost of equity e What are BEAS WACC and total value of the firm with 45% debt? Do not round intermediate calculations. Round your answer to two decimal places Beta: 6 What is the total value of the firm with 45% debt? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not found intermediate calculations. Round your answer to three decimal places million
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