6. (5 points) In t = 0, SpaceY Inc. is an unlevered company whose Beta is 2. The risk free-rate in the economy is 5%, and the market return is 10%. To begin with, assume that capital markets are perfect and Modigliani-Miller (MM) assumptions hold true. (a) Determine the required cost of equity using CAPM. (b) Given your answer in part (a), suppose that in t = 1 Spacey does a leveraged recapitalization, issuing risky debt and repurchasing stocks until its debt-equity ratio is 1. The rate of return on debt is 5%. i. Will the Beta of Space Y rise after the recapitalization? Ex- plain why in max 2 lines. lii. Do you have enough information to compute the value of Beta of Space Y's equity? Explain why