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Review this situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp, has gathered the following financial information to help

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Review this situation: Transworld Consortium Corp. is trying to identify its optimal capital structure. Transworld Consortium Corp, has gathered the following financial information to help with the analysis. Stock Price 36.25 37.75 Debt Ratio Equity Ratio EPS DPS 309 70% 1.25 0.55 40% 60% 1.40 0.60 50% 50% 1.60 0.65 60% 40 1.85 0.75 70% 30% 1.75 0.70 39.50 38.75 38.25 Which capital structure shown in the preceding table is Transworld Consortium Corps optimal capital structure? Debt ratio - 40%; equity ratio = 5 Debt ratio 60%; equity ratio = 40% o Debt ratio 309; equity ratio -70% Debt ratio -50% equity ratio -50% Debt ratio -70% quity ratio 30% Globex Corp. is an all-equity firm, and it has a beta of 1. It is considering changing its capital structure to 70% equity and 30% debt, The firm's cost of debt will be 8%, and it will foce a tax rate of 45% What will Globex Corp's bet be if it decides to make this change in its capital structure? Now.consider the case of another company US Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt 188%, and its tax rate is 45%. It currently has a levered beta of 1.25. The risk-free rate is 3%, and the risk premium on the market is 84. US Robotics Inc. is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm's level of debt will cause its before tax cont of debt to increase to 10% First, solve for US Robotics Ines unlevered beta, Use Us Robotics Inc's unlevered beta to solve for the firm's levered beta with the new capital structure Use US Robotics Incs levered bets under the new capital structure, to solve for its cost of equity under the new capital structure What will the firm's weighted average cost of capital (WACC) be if it makes this change in its capital structure 62% 3.39 9.99 10.4% MacBook Air

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