Belmont Bells is considering a change in its capital structure. Belmont currently has $20 million in debt carrying a rate of 8%, and its stock price is $40 per share with 2 million shares outstanding. Belmont faces a 40% tax rate. The market risk premium is 4%, and the risk-free rate is 6%. Belmont is considering increasing its debt level to a capital structure with 40% debt, based on market values. Belmont has a current cost of equity of 9%

. a. What is Belmonts current levered beta?

b. What is Belmonts unlevered beta?

c. What would be Belmonts estimated cost of equity if it were to change its capital structure to 40 percent debt and 60 percent equity?