1. XYZ Enterprises has a levered beta of 1.25, its capital structure consists of 60% debt and 40% equity, andits tax rate is 25%. What would XYZs beta be if it used no debt, i.e., what is its unlevered beta?

2. XYZ Inc. has a value of operations of $50,000, short-term investments of $5,000, $25,000 in debt, and 500shares outstanding. The company plans on distributing $2,500 through stock repurchases. Assuming there purchase does not signal new information, what will the stock price be immediately following there purchase?

3. XYZ Inc. hire you as a consultant for an upcoming recapitalization of their company. The companys currentcapital structure is 20% debt and 80% equity, the WACC is 10.5%, and the value of the firm is $500. Youdetermine that the optimal capital structure is 45% debt and 55% equity, which will result in a new WACCof 9.5% and a new firm value of $575. The firm currently has no short-term investments, and it will use allof the new debt it issues to repurchase shares. How much debt (to the nearest million) should the company issue to achieve its target capital structure?