Here you find the balance sheets for firm X and firm Y:

Balance Sheet Firm X Balance Sheet Firm Y

NOA $2000$ E $2000$ NOA $4000$ E $2000$

NIBD $2000$

Both firms are identical operating$-$wise. The market value of equity of firm Y is $3000.$ The

beta of equity of firm Y is $1\mathrm{.}5$ and its beta of debt is $0.$ The risk$-$free rate is $3\%,$ and the

market risk premium is $5\%.$ There are no taxes in this economy.

a$)$ Calculate Y$$s cost of equity using the CAPM.

b$)$ Calculate Y$$s unlevered beta.

c$)$ What is X$$s beta of equity or levered beta?

d$)$ Calculate X$$s cost of equity. If you cannot calculate the beta of equity in c$),$ use a beta

of equity of $1.$

e$)$ Without doing any calculations, what should Y$$s WACC be$?$ Explain.

f$)$ Given your answer in e$),$ calculate Y$$s cost of debt. If you cannot calculate the WACC

in e$),$ use a WACC of $8\%$