4.) (14 points) A company is considering a change in its capital structure. The company currently has $60 million in debt carrying a rate of 7%, and its stock price is $15 per share with 10 million shares outstanding. The company is a zero growth firm, and pays all of its earnings as dividends The firm's EBIT is $30 million, and it faces a 21% federal-state tax rate. The market risk premium is 6.000, and the risk-free rate is 3%. The company has a beta of 1.6. A.) What is the company's unlevered beta? B.) The company is considering increasing its debt level to a capital structure with 45% debt, based on market values, and repurchasing shares with the extra money that it borrows. The company will have to retire the old debt in order to issue new debt, and the rate on the new debt will be 9%. What is the company's beta and the company's cost of equity if debt is increased to 45%? C.) What is the company's WACC and the total value of the firm with 45% debt? 2