5. The relationship between a firm's capital structure and other company attributes Under the assumptions of Modigliani and Muller's onginal paper, a firm's stock price will be maximized at 100% - Signaling theory implies that a firm with extremely favorable prospects wil be more likely to issue. offering, the price of its stock will usually to fund any new projects. When a firm announces a new stock prospects than investors do. - When information is , managers have more information about a firmo's Blue Ram Erewing 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 1.15 , and its cost of equity is 11.55%. Because the firm has no debt in its capital structure, its weighted average cost of capital (WACC) also equais 11.55%. The risk-free rate of interest (fue) is 3.5%, and the market risk premium (RPM) is 7%. Blue Ram's marginal tar rate is 25%. Bive 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 finandal information that follows to analyze its weighted average cost of capital (WACC). Complete the following table