QUESTION 18 Narrative 2 The XYZ Corporation has 550 million in excess cash and no debt. The company expects to generate additional Ras of 587 million per year in perpetuity. The XYZ Corporation has 25 million outstanding shares and has an unlevered cost of capital of 15 percent Narrative An all equity company is analyzing a proposal to recapitakze the capital structure, The company has hired your consulting form to help wth the analysis in doing your research and due diligence, you gathered the following informaton The company expects FCF of $250,000 for the foreseeable Muture The company has an unlevered beta of 0 85 The company has 250,000 outstanding shares The company faces a corporate tax rate of 27 percent The company's stock price is 513 16 per share For your analysis. you use a risk free rate of 2.5 and an equity risk premium of 6% Your task is to analyze a capital structure that calls for 70% equity and 30% debt. The company will issue bonds at 2,8% (this is the cost of debts and use the proceeds to repurchase equity What is the beta levered at the proposed capital structure? O Beta levered=0.919 Beta levered = 1005 Beta levered 1.116 Beta levered = 1264