Quantitative Problem: Currently, Meyers Manufacturing Enterprises $($MME$)$ has a capital structure consisting of $35\%$ debt and $65\%$ equity. MME's debt currently has a $7\%$ yield to maturity.

The risk$-$free rate $(r_{RF})$ is $5\%,$ and the market risk premium $(r_M-r_{RF})$ is $6\%.$ Using the CAPM, MME estimates that its cost of equity is currently $11\mathrm{.}6\%.$ The company has a $40\%$ tax rate.

a$.$ What is MME's current WACC? Do not round intermediate calculations. Round your answer to two decimal places.

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b$.$ What is the current beta on MME's common stock? Do not round intermediate calculations. Round your answer to four decimal places.

c$.$ What would MME's beta be if the company had no debt in its capital structure? $($That is$,$ what is MME's unlevered beta, bu$?)$ Do not round intermediate calculations. Round your answer to four

decimal places.

MME's financial staff is considering changing its capital structure to $45\%$ debt and $55\%$ equity. If the company went ahead with the proposed change, the yield to maturity on the company's

bonds would rise to $7\mathrm{.}5\%.$ The proposed change will have no effect on the company's tax rate.

d$.$ What would be the company's new cost of equity if it adopted the proposed change in capital structure? Do not round intermediate calculations. Round your answer to two decimal places.

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e$.$ What would be the company's new WACC if it adopted the proposed change in capital structure? Do not round intermediate calculations. Round your answer to two decimal places.

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f$.$ Based on your answer to Part e$,$ would you advise MME to adopt the proposed change in capital structure?

$-$Select$-$