A firm has a market value of $280 million in Debt and $220 million in equity a tax rate of 35% and a beta of 1.3 a. The 10-year Treasury bonds have a yield to maturity of 3%-consider this yield to be the long-term "rist-free" rate. Using a Market Risk Premium of 5% in the CAPM, estimate the cost of equity. b. The firm has a bond rating of B and its debt has a credit default premium of 4.3%. Use this information, along with your answer in part (a) to calculate the firm's WACC (actually, R_WACC) c. The firm issues $100 million in equity and uses the proceeds 10 buy back $1,00 million of debt in the process the debt rating increases to BBB and the credit default premium falls to 2.1%. The tax rate remains at 35%. What is the new WACC (R_WACC).? d. Is the firm better off with the old or new capital structure