Question: Optimal Capital Structure with Hamada Backman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currentiy has 520 millon in debt

 Optimal Capital Structure with Hamada Backman Engineering and Associates (BEA) is

Optimal Capital Structure with Hamada Backman Engineering and Associates (BEA) is considering a change in its capital structure. BEA currentiy has 520 millon in debt carrying a rate of 6xh, and its steck price is 540 per ahare with 2 million shares outstanding. BEA. is a zero-growth firm and pays out all of its aamings as dividends, The firm's E6Ir is ts 2 million, and it faces a 25W federal-plut-ctate tax rate. The market risk premium is 5 fi, and the risk-free rate is 7. . BEA is considering increasing its debt ikvel to a cepitol atructure with 35w debt, based on market values, and repurchasing shares with the extra money that it botrowa. BEA will have to rdtire the old debt in order to itsult new debt. and the rate on the new-debt will be 10\%4. BEA has a beth of 1.0 , a. What is BEA's unlevered beta? Ute market value D/5 (which is the some as wof wi) when unlevering. Do not round intermediate calculatoas. Round your answar to two decimal places. b. What are BEA's new beta and cost of equity if it has 35% debt? Do not round intermediate calculations. Round your answers to two decimal places. Beta: Cost of equity: c. What is DEA's WACC with J5w debt? Do not round intermediate caiculations. Round your answer to two decimal places. 33 What is the total value of the firm with 35% debtl Do not round intermediate calculatons. Enter your answer in millons. For example, an answer of s1.234 milion sheuld be entered on 1.234,not1,234,000. Round your answer to three decimal places. 4 mition

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