5.

(its all ONE question as you can see on the photo, please answer all parts clearly or do not attempt, thank you!!, as students we get limited questions and are looking for proper explanations, when you answer a part of the question & quote the policy of answering 1 "question" it doesn't serve the purpose)

5. The relationship between a firm's capital structure and othercompany attributes As a firm takes on more debt, its probability of bankruptcy constant, a firm whose earnings are relatively volatile faces a . Other factors held Therefore, when other factors are held constant, a firm whose earnings are relatively volatile should use debt than a more stable firm. When bankruptcy costs become more important, they the tax benefits of debt. Blue Ram Brewing Company currently has no debt in its capital structure, but it is considering using some debt and reducing its outstanding equity. The firm's unlevered beta is 1.05 , and its cost of equity is 12.40%. Because the firm has no debt in its capital structure, its weighted average cost of capital (WACC) also equals 12.40%. The risk-free rate of interest (rRF) is 4%, and the market risk premium (RPM) is 8%. Blue Ram's marginal tax rate is 25%. Blue Ram is examining how different levels of debt will affect its costs of debt and equity, as well as its WACC. The firm has collected the financial information that follows to analyze its weighted average cost of capital (WACC). Complete the following table. 5. The relationship between a firm's capital structure and othercompany attributes As a firm takes on more debt, its probability of bankruptcy constant, a firm whose earnings are relatively volatile faces a . Other factors held Therefore, when other factors are held constant, a firm whose earnings are relatively volatile should use debt than a more stable firm. When bankruptcy costs become more important, they the tax benefits of debt. Blue Ram Brewing Company currently has no debt in its capital structure, but it is considering using some debt and reducing its outstanding equity. The firm's unlevered beta is 1.05 , and its cost of equity is 12.40%. Because the firm has no debt in its capital structure, its weighted average cost of capital (WACC) also equals 12.40%. The risk-free rate of interest (rRF) is 4%, and the market risk premium (RPM) is 8%. Blue Ram's marginal tax rate is 25%. Blue Ram is examining how different levels of debt will affect its costs of debt and equity, as well as its WACC. The firm has collected the financial information that follows to analyze its weighted average cost of capital (WACC). Complete the following table