Review this situation Universal Exports the, is trving to identify is optimal capital structure. Universal Exports Inc. has gathered the following firancial intormation to help whet the analysis. Globex Corp. is an all-equity firm, and it has a beta of 1. It is considering changing its capital structure to 65% equity and 35% debt. The firm's cost of debt will be 10%, and it will face a tax rate of 25%. What will Globex Corpis beta be if it decides to make this change in its capital structure? Now consider the case of another company: is considering changing its capital structure to 60% debt and 40% equity. Increasing the firm's level of debt will cause its before-tax cost of cebt to increase to 12%. Fingt, solve for us Robotics incis unlevered beta Uie US Fobotics Incis unievered beta to salve for the firm's levered beta with the new capical structure. Use US pobotics Ineis levered betiz under the hew capital structure, to solve for its cost of equity under the new. cabital atructure. US Robotics inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 10%6, and its tax rate is 25%. It currently has a levered beta of 1.15 . The risk-free rate is 3.5%, and the risk premium on the market is 8%. Us Robotics inc. is considering changing its capital structure to 60% debt and 40%6 equity. Increasing the firm's level of debt will cavese its before-tax cost of debt to increase to 12%. First, solve for us Robotics Inc,'s unlevered beta. Use US Robotics Incis unlevered beta to solve for is levered beta with the new capital structure. Use Us Robotics incis levered beta under the new What will the firm's weighted average cost of capit 0.78 c) be if it makes this change in its capital structure? 8.8996 8.25% 12.704 10.16% US fobotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 10%, and its tax rate is 25%. It currentyy has a levered beta of 1.15 . The risk-free rate is 3.5%, and the risk premium on the market is 8%. 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 cost of debt to increase to 12%. First, solve for us Robotics Incis unlevered beta. Use US Robotics Incis unlevered beta to solve for the firm's levered beta with the new capital structure. Use US Robotics Inci's levered beta under the new capital structure, to solve for its cost of equity under th 1.76 apital structure. What will the firm's weighted average cost of capital (WACC) be if it makes this change in its capital struo 1.85 6.8950 6.25% 12.70in 10.167 US Robotics Inc. has a current capital structure of 30% debt and 70% equity. Its current before-tax cost of debt is 10%, and its tax rate is 25%. It currently has a levered beta of 1.15. The risk-free rate is 3.5%, and the risk premium on the market is 8%. 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 cost of debt to increase to 12%. First, solve for us Robotics inc.'s unlevered beta. Use US Robotics Inc:"s unlevered beta to solve for the firm's levered beta with the new capital structure. Use US Robotios Incis levered beta under the new capital structure, to solve for its cost of cquity 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? 8.994 8.25% 12,7054 10.16%
