Question 6: (13 points - 4+4+4+1) RusAI, has a Beta on Equity of 1.1 and a Beta on Debt of 0.2. Pls assume a risk free rate of 5% and risk premium of 5%. Assume there are no taxes. Calculate the cost of capital if the capital structure is 20% debt. Tomorrow the capital structure changes to 70% debt. Compute the new Beta on equity and Beta on Assets if the Beta on debt remains constant as you do not expect a change in credit rating. What is the WACC after the change of capital structure? Calculate the new cost of equity as well. What is the main lesson? Assume there are no taxes