b. Scenario 2: Now the capital structure changes from 100% equity to 40% equity 8 and 60% debt. The new tax rate = 15%. What is the new equity beta? 4. Assume the following scenario of firm XYZ: market value of stock = $14 million, total value of debt = $9 million, Equity beta = 1.9, risk-free rate = 5.32%, expected 9 market return -12.7%, taxes = 0%, cost of debt = 11.97%. 10 a. Based on the above information, what is the expected risk premium? 11 b. What is the Expected return on equity? 12 c. What is the Weighted Average Cost of Capital? 13 14 15