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A firm is considering a change to its capital structure: Current debt = $250,000 Current equity = $750,000 . Current beta = 1.083 Unlevered beta

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A firm is considering a change to its capital structure: Current debt = $250,000 Current equity = $750,000 . Current beta = 1.083 Unlevered beta = 0.866 Risk-free rate = 5.0% Market risk premium = 6.0% The firm's tax rate = 25%. Currently, CAPM is 11.5% What would the firm's beta be if it increased its debt to $345,000? Select one: O a. 1.165 O b. 1.265 O c. 1.229 O d. 1.209 O e. 1.000

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