LVMH currently has a debt-to-capital ratio of 10% and an average tax rate of 34%. LVMH's bonds have a 4% yield to maturity. Using the CAPM, the firm estimates that its cost of equity is 10%.

The firm is considering a new capital structure with a debt-to-capital ratio of 45%. An investment bank has estimated that the yield to maturity on the company's bonds would rise to 5%.

The risk-free rate is 2% and the expected equity market risk premium (MRP) is 7%.

1: LVMH's curent WACC 0.0926 2: Beta of common stock 1.143 3: beta with no debt 1.0649 4: new beta if company went ahead with the recapitalization 1.6399

Part 5: What would be the new cost of equity after the recapitalization?

Part 6: What would be the new WACC after the recapitalization?