Currently, Forever Flowers Inc. has a capital structure consisting of $30\%$ debt and $70\%$ equity. Forever's debt currently has an $8\%$ yield to maturity. The risk$-$free

rate $(r_{RF})$ is $4\%,$ and the market risk premium $(\{$:$r_M-r_{RF})$ is $5\%.$ Using the CAPM, Forever estimates that its cost of equity is currently $14\mathrm{.}5\%.$ The company has a

$40\%$ tax rate.

a$.$ What is Forever's current WACC? Round your answer to two decimal places.

$\%$

b$.$ What is the current beta on Forever's common stock? Round your answer to two decimal places.

c$.$ What would Forever's beta be if the company had no debt in its capital structure? $($That is$,$ what is Forever's unlevered beta, bu$?)$ Do not round intermediate

calculations. Round your answer to two decimal places.

Forever's financial staff is considering changing its capital structure to $40\%$ debt and $60\%$ equity. If the company went ahead with the proposed change, the yield

to maturity on the company's bonds would rise to $10\%.$ The proposed change will have no effect on the company's tax rate.

d$.$ What would be the company's new cost of equity if it adopted the proposed change in capital structure? Do not round intermediate calculations. Round your

answer to two decimal places.

$\%$

e$.$ What would be the company's new WACC if it adopted the proposed change in capital structure? Do not round intermediate calculations. Round your answer to

two decimal places.

$\%$

f$.$ Based on your answer to part e$,$ would you advise Forever to adopt the proposed change in capital structure?

$-$Select$-$

Yes

No