1. (35 points) Your firm wants to increase its use of debt in order to increase tax shield Currently, the firm has $50 million in debt outstanding, $50 million common equity. The firm wants to raise enough debt to repurchase $10 million in common equity. The firm also wants to raise $10 million in debt to fund a new project (project C) and $10 million in debt to expand a current project (project B). You need to determine by how much WACC will change if the fimm takes these actions. The firm's debt beta is 0-3 and the cost of debt is 8%. The market return is 15% and the risk-free rate is 5%. The firm has only two projects currently. The firm has invested $20 million in project A, which has a beta of 1.2. The firm has invested $80 million in project B. with a beta of 1.80. Project C has a beta of 1.56. The firm's common equity currently has a correlation of 0.7 with the market, and a standard deviation of 71.7, but this is subject to change when the firm changes its characteristics. The market's variance is 400. The tax rate is 40%. If the changes will not change the debt beta/cost of debt, by how much will the WACC change