Apple has an equity beta of 1.4 and its cost of debt is 3%. Apple's total value is $150 million and is financed with $90 million in equity and $30 million in debt that has been treated as permanent. Apple. is considering increasing its debt by replacing $20 million of equity with $20 million in debt through an investment bank who would charge Apple $200,000 to process this change.

(a) What will be the total value of the firm after the change in capital structure?

(b) What will be the value of the remaining equity after the change in capital structure?

(c) What will happen to Apples asset beta after the change in capital structure?

(d) What will be Apples new cost of equity after the change in capital structure?

ASSUME: Risk-free rate=3%; Equity market risk premium=8%; Tax rate=21%.