Question Currently, Adam Loops Inc. has a capital structure consisting of 30% debt and 70% equity. Adam's debt currently has a 10.5% yield to maturity. The risk-free rate (TRF) is 7%, and the market risk premium (TM IRF) is 6%. Using the CAPM, Adam estimates that its cost of equity is currently 12.5%. The company has a 35% tax rate. a. 2 Marks What is Adam's current WACC? b. 3 Marks What is the current beta on Adam's common stock? c. 3 Marks What is Adam's unlevered beta, bU? Adam's financial staff is considering changing its capital structure to 50% debt and 50% equity. If the company went ahead with the proposed change, the yield to maturity on the company's bonds would rise to 13.5%. The proposed change will have no effect on the company's tax rate. d. 2 Marks What would be the company's new cost of equity if it adopted the proposed change in capital structure? e. 3 Marks What would be the company's new WACC if it adopted the proposed change in capital structure