Quantitative Problem: Currently, Meyers Manufacturing Enterprises $($MME$)$ has a capital structure consisting of $35\%$ debt and $65\%$ equity. MME's

debt currently has a $6\mathrm{.}9\%$ yield to maturity. The risk$-$free rate $(r_{RF})$ is $4\mathrm{.}9\%,$ and the market risk premium $(r{M}_M-rR{F}_R)$ is $5\mathrm{.}9\%.$ Using the CAPM, MME

estimates that its cost of equity is currently $12\mathrm{.}9\%.$ The company has a $40\%$ tax rate.

a$.$ What is MME's current WACC? Round your answer to $2$ decimal places. Do not round intermediate calculations.

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b$.$ What is the current beta on MME's common stock? Round your answer to $4$ decimal places. Do not round intermediate calculations.

c$.$ What would MME's beta be if the company had no debt in its capital structure? $($That is$,$ what is MME's unlevered beta, bu$?)$ Round your answer to $4$

decimal places. Do not round intermediate calculations.

MME's financial staff is considering changing its capital structure to $45\%$ debt and $55\%$ equity. If the company went ahead with the proposed change,

the yield to maturity on the company's bonds would rise to $7\mathrm{.}4\%.$ 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? Round your answer to $2$ decimal places. Do

not round intermediate calculations.

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e$.$ What would be the company's new WACC if it adopted the proposed change in capital structure? Round your answer to $2$ decimal places. Do not

round intermediate calculations.

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