3. The IAM Company is considering a change in its capital structure. IAM currently has $10 million in debt carrying a rate of 10%, and its stock price is $8.418 per share with 4 million shares outstanding. IAM is a zero-growth firm and pays out all of its earnings as dividends. The firm's EBIT is $12 million, and it faces a 40% tax rate. The market risk premium is 8%, and the risk-free rate is 10%. IAM is considering increasing its debt level to a capital structure with 30% debt, based on market values, and repurchasing shares with the extra money that it borrows. IAM will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 11%. IAM has a beta of 1.2. a. What are IAM's current WACC and firm value (6 Pts)? b. What is IAM's unlevered beta? Use market value D/S when unlevering. (6 Pts) c. What are IAM's new beta and cost of equity if it has 30% debt? (6 Pts) d. What are IAM's WACC and total value of the firm with 30% debt? (7 Pts)